BUSINESS BEFORE QUESTIONS

Manchester City Council Bill [ Lords] and Bournemouth Borough Council Bill [ Lords]

Motion made, and Question (15 January) again proposed,
	That the promoters of the Manchester City Council Bill [ Lords] and Bournemouth Borough Council Bill [ Lords], which were originally introduced in the House of Lords in Session 2006-07 on 21 January 2007, may have leave to proceed with the Bills in the current Session according to the provisions of Standing Order 188B (Revival of bills).—( The Chairman of Ways and Means).

Hon. Members: Object.
	 The debate stood adjourned; to be resumed on Thursday 26 February.

Canterbury City Council Bill, Leeds City Council Bill, Nottingham City Council Bill and Reading Borough Council Bill

Motion made, and Question (15 January) again proposed,
	That the promoters of the Canterbury City Council Bill, Leeds City Council Bill, Nottingham City Council Bill and Reading Borough Council Bill, which were originally introduced in this House in Session 2007-08 on 22 January 2008, may have leave to proceed with the Bills in the current Session according to the provisions of Standing Order 188B (Revival of bills).—( The Chairman of Ways and Means).

Hon. Members: Object.
	 The debate stood adjourned; to be resumed on Thursday 26 February.

ORAL ANSWERS TO QUESTIONS

TREASURY

The Chancellor of the Exchequer was asked—

Departmental Holdings (Banks)

Peter Bone: What expenditure his Department incurred in acquiring its holdings in Royal Bank of Scotland plc, HBOS plc and Lloyds TSB plc; and what the monetary value of those holdings was on the most recent date for which figures are available.

Alistair Darling: Under the recapitalisation scheme that I announced on 8 October, the Government invested £19.97 billion in the Royal Bank of Scotland group and £16.96 billion in the Lloyds banking group, which was formerly Lloyds TSB and HBOS.

Peter Bone: I think that the Chancellor forgot to answer the second half of the question; anyway, I will press on. What is the total exposure that British taxpayers face, both direct and contingent, as a result of the purchase of the bank shares, the provision of loans and the offer of guarantees? Chancellor, can we have a straight answer this time? Can we have the figure, and can you tell us how much of our children's future you are gambling?

Alistair Darling: rose—

Mr. Speaker: Order. The way in which the hon. Gentleman addresses the House is out of order; he knows that. I have had to say that to other hon. Members. We have got to stick to the rules.

Alistair Darling: At each stage, I have set out to the House what the Government propose to do and what the cost is. In relation to the purchase of a shareholding, the Government purchased shares, and that came to a total of £37 billion. That was part of the recapitalisation process. I have to tell the hon. Gentleman that that part of the Government's proposals over the past few months was supported by hon. Members on both sides of the House. It was recognised as being absolutely necessary to recapitalise the banks because we were within hours of the banking system collapsing last October; that is why we did it.
	The hon. Gentleman asks about other measures that we have put in place—for example, the special liquidity scheme, which I announced in April last year and of which the Bank of England reported last week that about £185 billion has been taken up. That has been more than covered by the collateral lodged by banks, which is over £240 billion, and in addition the Government charge fees that total about £2 billion for that. That is just one example of where we have given guarantees that are just that—guarantees, not money that is being paid out at the moment. I believe that the range of measures that we have taken—other countries around the world have done the same or similar—was absolutely necessary. What I really find surprising is that having supported us last October the hon. Gentleman is now attempting to run away from the decisions that we all took then.

David Taylor: With taxpayers now holding a majority stake in Lloyds, which Her Majesty's Revenue and Customs is investigating for double dipping and tax avoidance via Cayman islands companies—biting off the hand that feeds it comes to mind—will the Chancellor of the Exchequer say what access the Government had to Lloyds' books before pumping in billions of pounds of public money and whether any condition, such as an end to all tax avoidance activity, were attached to our cash being used to save a bank that has so successfully shifted the tax burden from corporations on to small businesses and families?

Alistair Darling: Let me make a couple of points to my hon. Friend. First, as he is no doubt well aware, because this matter is currently before the courts there is a limit to what I can say. As a matter of general principle, Ministers do not normally comment on the individual circumstances of any taxpayer, corporate or individual, for perfectly good reasons. However, I can say to him that the so-called double dip scheme was shut down by the Government in 2005. In addition, anti-avoidance measures that we have introduced have saved the taxpayer about £11 billion over the past couple of years. On top of that, from 2004 schemes of this sort have had to be reported to HMRC to ensure that if there is abuse or if any measures that are being taken have unintended consequences that are harming the taxpayer, action can be taken very promptly. That will remain the case. At each Budget, I will ensure that if there are loopholes that need to be closed, we will take the action necessary.

Michael Fallon: Can it really be right that the body looking after the taxpayer's interest in these two banks should be chaired by Mr. Moreno, who appears to have been heavily involved in tax-dodging in Liechtenstein? In the interests of getting a consensus behind United Kingdom Financial Investments, is the Chancellor wise to proceed with that appointment?

Alistair Darling: The hon. Gentleman will be aware that following Sir Philip Hampton's appointment to chair the RBS board, I asked Mr. Moreno to take his place as acting chair. I will make a decision on the permanent replacement in the near future. I agree with the hon. Gentleman that we should take a firm hand on tax loopholes and on people not paying the tax they should, and I hope that he will have a word with one or two prominent Conservative donors who do not choose to pay their taxes in this country.

Brooks Newmark: Using generally accepted accounting principles, how much has the nationalisation of the banks added to the national debt?

Alistair Darling: As I said to the hon. Member for Wellingborough (Mr. Bone), we have reported all the potential and actual exposures in relation to the purchase of assets or the guarantees, and we will continue to do that in the normal way.

Vincent Cable: Is it not becoming increasingly clear to the Chancellor that the ferocious resistance of the management of these banks to the Government's full takeover of them, albeit on a temporary basis, is motivated by a desire to protect bonuses and salaries, to resist write-downs and loss declarations and to protect cynical tax avoidance schemes? When will the Government avoid this farcical and completely ineffective arm's length management arrangement?

Alistair Darling: I do not agree with everything that the hon. Gentleman says. First, I believe that it was necessary to take Northern Rock into public ownership on a temporary basis, but I do not believe that we should seek to take over banks as a matter of course. They are better being commercially run, and I think that the hon. Gentleman and I would both agree that the Government cannot be in the business of running these banks in the long term. However, disclosing the nature and the extent of losses, and providing a greater degree of transparency, is absolutely necessary and we will continue, especially as we work out the insurance scheme of the assets, to ensure that people completely understand the nature of the liabilities that the banks have entered into.

George Osborne: I think that the answer to my hon. Friend the Member for Sevenoaks (Mr. Fallon) means that the Government are about to lose their second key banking adviser, but may I ask about the resignation of the first? Are we really expected to believe that when the Prime Minister appointed Sir James Crosby to the board of the Financial Services Authority, and when the current Chancellor promoted him to the job of deputy chairman in 2007, neither of them had any idea that they were appointing someone whose business model at HBOS was being investigated by the regulator whose board they were appointing him to?

Alistair Darling: As the Prime Minister has just told the Liaison Committee, Sir James's appointment in 2003 was made on the recommendation of a selection panel that followed an open competition, and that panel, which was chaired by the senior official then responsible for banking regulation, Sir James Sassoon, recommended the appointment of James Crosby. At that time, there was no reason to question that appointment. With the benefit of hindsight, many people now make claims about what they say they knew at that time, but the then Chancellor followed the proper procedures and followed the advice, and he had no reason not to make the appointment.
	The FSA has said that in 2002, and subsequently, it drew attention to a number of concerns, as it did with several other organisations. In terms of the law, the way in which the FSA supervises any bank, let alone this one, is a matter for it. Neither the subsequent investigation into the allegations made against James Crosby, nor the concerns that it had, were reported to the Treasury. I would not expect them to have been, given the information that I have from the chief executive of the FSA at the moment.

George Osborne: Either the Chancellor knew what was going on and did nothing, or he was entirely ignorant, and neither is much of a defence. Is not the net closing in on the Prime Minister and the Chancellor? Their accomplices are resigning, their alibi that no one knew what was going on has been blown apart, and their fingerprints are all over the mistakes that were made during the age of irresponsibility.
	Is there a coherent view in the Cabinet about how long this recession will last? We know what the Treasury's forecasts are, and we know what the Chancellor says about the economy recovering halfway through this year, but today the Health Secretary has said that we need to be ready for two years of recession. Is the Health Secretary expressing the collective view of the Government on this issue?

Alistair Darling: In relation to the FSA, the hon. Gentleman's claims are frankly ridiculous. Appointments were made in the normal way, which is a great deal more open than for some of the appointments that were made in the past. At the time, there was no reason not to accept the recommendations in relation to Sir James Crosby.
	On the broader economic picture, as I have said to the House on a number of occasions, there has been an extremely sharp downturn not just in this country but in countries right across the world, and we can see the effects of that. I am clear, though, that if we had followed the hon. Gentleman's advice and done absolutely nothing to prevent the full effects of the recession from being felt, the impact and the long-term damage to this country would have been substantial. I believe that the action that we have taken is not only justified but will ensure that this recession will be shorter and less painful than would otherwise be the case. I am sorry that the Conservative party continues to take the view that there is absolutely nothing that they are prepared to do to help people and businesses in this country.

Dennis Skinner: Is the Chancellor aware that the most delightful thing about this episode is that most bankers naturally represent the Tory party? I am quite enjoying the spectacle of these Tories liaising with bankers one day and attacking them the next. As a socialist, I think that at the end of the day we might see a better banking system and, next time, put some socialists on the banks. The other thing that has emerged is that the Tories are complaining about tax avoidance, and they are people who, over the years, have been experts at it.

Alistair Darling: rose—

Mr. Speaker: Order. I think that we have drifted away from supplementary questions to Question 1.

Short Selling

Lindsay Hoyle: What discussions he has had with the Financial Services Authority on its decision to lift the ban on short selling in the financial markets; and if he will make a statement.

Ian Pearson: The UK tripartite authorities—the Treasury, the Bank of England and the Financial Services Authority—are working closely together to ensure the stability of the UK financial system. The FSA, as an independent regulator, reviewed its ban and decided not to maintain it. It stands ready to reintroduce the ban should circumstances require it.

Lindsay Hoyle: I thank my hon. Friend for that answer, but the FSA has let the public and business down, and it acts like a toothless tiger. It is time that it got tough. The only time that it got tough was on short selling, and what did it do? It withdrew the ban. The time has come for the Minister to introduce strong regulation and make the FSA use it, because the people of this country would not forgive it if this were to happen again. Let us get tough and take action now.

Ian Pearson: I understand what my hon. Friend says about tough regulation, but I have to say that there is no evidence that hedge funds and speculators are short selling and driving down the stock of banks at the moment. There is a short selling disclosure regime in place, whereby if short selling transactions reach 0.25 per cent. they must be disclosed. All the evidence that we have at the moment shows that there is no significant short selling activity in bank stocks. Of course the FSA, as the independent regulator, will continue to monitor the situation and stands ready to reintroduce a ban if it is necessary to do so.

Richard Ottaway: The Minister is distancing himself from the decision to lift the ban, so why did he take the credit when it was imposed?

Ian Pearson: I am not distancing myself from it at all. I am just making it clear that the FSA is an independent regulator and takes its own decisions, although it works closely with the other tripartite authorities, the Bank of England and ourselves in Her Majesty's Treasury. As the hon. Gentleman will know, in addition to the current temporary disclosure regime, the FSA is proposing greater transparency in short selling more generally. We believe that that is important and can help to protect all UK firms, not just those in the financial sector. A discussion document was issued just over a week ago on this issue.

Ann Cryer: In his discussions with the FSA, will my hon. Friend ask for an explanation of why the building societies pay 15 per cent. of their pre-tax profits into the Financial Services Compensation Scheme while the banks pay only 5 per cent.? Will my hon. Friend meet colleagues and representatives of the building societies?

Ian Pearson: My hon. Friend refers to the Financial Services Compensation Scheme. We consulted on the rules over a couple of years, and the scheme was introduced in April 2008. I remember that, at the time, the building societies said that they wanted to be in the same category as the banks for deciding the rate that they pay for their protected deposits. They might have changed their minds since, and they will want to take that up with the FSA as an independent regulator, but I am always happy to meet my hon. Friend to discuss any problems.

Nicholas Winterton: I agree entirely with the hon. Member for Chorley (Mr. Hoyle). Is not short selling an immoral and corrupt practice that makes no positive contribution to the creation of wealth? There should be a permanent ban on it.

Ian Pearson: Perhaps we should demystify short selling a little. I do not know whether the hon. Gentleman buys goods over the internet, but if one buys books, hi-fi equipment and televisions, they are often bought from a supplier who does not have the goods, but makes a commitment to get them from a purchaser. That is short-selling activity. We believe—and the markets understand—that short selling can help facilitate price discovery, which is important for valuing companies fairly, price efficiency and liquidity in the market. However, we need to ensure great transparency about the matter. We do not want to go back to the days of George Soros, speculation, and major runs on companies and countries. That is why the disclosure regime is important.

Banking Industry

Chris McCafferty: What recent assessment he has made of the effectiveness of steps taken by his Department to recapitalise the banking industry in the last six months.

Alistair Darling: The action we took in October prevented the collapse of the banking system. That, together with the measures that I announced in the pre-Budget report, continues to support businesses and families in this country.

Chris McCafferty: I thank my right hon. Friend for that reply. Given the amount of toxic debt in the system, will he consider creating a public-private investment fund, designed to remove toxic debt from financial institutions' balance sheets? Or perhaps he favours the Credit Suisse model of banks creating internal hedge funds in which they put their toxic debts to pay directors' bonuses.

Alistair Darling: My hon. Friend is right that different solutions are being developed across the world to deal with the basic problem, which is that far too many banks have assets that either turn bad or have clearly reduced in value because of the economic downturn.
	The new United States Administration have proposed the first suggestion that my hon. Friend made—a joint venture by Government and the private sector—although the details have still to be worked up. I said on 19 January that, in this country, we wanted to develop an insurance scheme, whereby the Government could provide back-stop insurance for some assets. That would remove some of the uncertainty in the system, which holds back banks' ability to lend to businesses and people in this country. I also said that we have not closed our minds to the creation of a so-called bad bank. Indeed, we did precisely that in the case of Bradford & Bingley—we split the bank between the part that took deposits, which is still viable and was sold to Santander, and the long-term liabilities, which have been kept and run down. There are a variety of solutions to the problem.
	The main problem, as I said in reply to the hon. Member for Twickenham (Dr. Cable), is that we need to get banks to realise and disclose the extent of the liabilities as soon as possible. Until that uncertainty comes out of the system, banks will continue to be reluctant to lend to each other and to their customers, not only here but throughout the world.

David Davis: The proper test of the effectiveness of the recapitalisation scheme is the willingness of the banks to continue viable lending. Unfortunately, the failure of that willingness has led to a viable, profitable, long-term and well respected company in my constituency having to declare 1,000 job losses, 400 in my constituency and in that of the Health Secretary. That is a failure of the recapitalisation regime, of the credit guarantee regime and of the Treasury, in not intervening. Will the Chancellor undertake now to intervene in the case of the finance company Cattles, to ensure that the credit guarantee scheme underpins it?

Alistair Darling: There are two issues there. First, I do not agree with the right hon. Gentleman in relation to the recapitalisation scheme that I announced in October. It was there primarily to stop the banking system collapsing. That was the scheme's purpose, and it was supported by all parties in the House at the time. I appreciate that since then it has been convenient for his party to run away from that, but that is why the scheme was there. In relation to his general point about lending, he is right that the crucial thing is for us to try to get lending going as quickly as possible. The recapitalisation was of course necessary, because if there were no banks, there could not be any lending. That was the first stage. The measures that I announced in January are designed to do more to get lending going.
	In relation to Cattles, I am aware of the problem, which has been raised with me by other hon. Members in the House. In relation to the credit guarantee scheme, that is available to banks. That is what it was set up for and it has been run by the Bank of England. I am aware of the Cattle scheme and I will continue to keep the House informed on it.

Jim Devine: Is my right hon. Friend aware that when the Conservative party was in power, unemployment in my constituency was 20 per cent.? Today it is less than 3 per cent. During that time we were told that high unemployment was a price worth paying and that if it was not hurting, it was not working. Is it not the case that today we are trying to prevent that scenario?

Alistair Darling: My hon. Friend is quite right. Yesterday's unemployment figures surely demonstrate the need to do more, not less, to help people who lose their jobs. The lesson from the 1980s is that the Government waited almost two years before they started to introduce any help, and most of that help was aimed at people who had been out of the labour market for some considerable time. As a result of that delay and doing nothing at that time, a whole generation of people was written off, and many of them never went back to work again. My hon. Friend and, I suspect, hon. Members in most parts of the House will have personal experience of knowing people who were in precisely that position.
	That is one of the reasons we set up Jobcentre Plus. We set it up in the good times, when unemployment was falling rapidly. We have given Jobcentre Plus more resources, in order to help people. Even today, the majority of people get back into work within six months of losing their jobs. We will continue to ensure that we put more money into the system to help people get back into work. There are nearly 500,000 vacancies in the economy. There are jobs; it is our job to match people up as soon as we can, preferably before they leave employment, in the event of being made redundant, and help them get back into work as quickly as possible. That is another example of where the Government can make a difference for the good.

Philip Hammond: A moment ago the Chancellor told my right hon. Friend the Member for Haltemprice and Howden (David Davis) that the primary purpose of the bank bail-out was to prop up the banks, but that is not how he described it when he made the announcement last October. He defined the criterion by which the effectiveness of that intervention was to be measured in these words:
	"The purpose of these proposals is to get lending started again and to get the economy moving forward."—[ Official Report, 8 October 2008; Vol. 480, c. 280.]
	Since then, survey after survey has shown that lending has dried up, and the published data show that the economy is shrinking. In the Chancellor's own definition, has the bail-out not been a failure?

Alistair Darling: No, and the hon. Gentleman well knows that what he is saying is absolute nonsense. The primary purpose of our intervention last October was to stop the banking system collapsing. Indeed, that is why he and his hon. Friends on the Front Bench supported us, so it is no good their now saying that they were not in favour of it and would have done something different. Of course, if there are no banks in the first place, there will be no lending, so propping them up was a precondition of getting lending going again. That is no more than a statement of the obvious.
	Since that time, there has been a substantial downturn of economies, not just here but in every country in the world. We can see that in all the forecasts and in all the figures that we know about at the present time. That is all the more reason for us to ensure that we get lending going again and help to fill the gap that has been left by foreign banks withdrawing from lending, not only in this country but in other parts of the world. It is also all the more reason for the Government to step in to help to support businesses and families.
	That approach is supported right across the world, and the Conservatives are virtually isolated as far as that is concerned. It has been backed by the independent Institute for Fiscal Studies—which is often favourably cited by the Conservatives when it suits them—and, even yesterday, the Bank of England's inflation report made the case that if Government support comes through, it will make a substantial difference to the position that would otherwise be the case. We are clear that supporting the banks and supporting our economy are absolutely essential, and I am sorry that the Conservative party cannot bring itself to give that support, because it is pretty essential for the future of our country.

Regional Development

Andrew George: What assessment he has made of the effect on the economy of EU regional development aid drawn down in the last 12 months; and if he will make a statement.

Yvette Cooper: The UK has already benefited to the tune of more than £5 billion in the 2000 to 2006 round of programmes. Final applications under the scheme are still being dealt with, and they are likely to increase that figure further.

Andrew George: In that case, why did Treasury Ministers turn down the offer of an extended package of European regional aid to all the UK's poorest regions as part of an EU fiscal stimulus package? I note that Treasury Ministers accepted an extension to the regional aid package for Scotland, Northern Ireland and Wales, but failed to take up the offer of the package of support for the UK's poorest region—Cornwall.

Yvette Cooper: As the hon. Gentleman will be aware, the Department for Communities and Local Government looked in detail at the possibilities, to determine whether the package would have a beneficial impact on the UK, including Cornwall. Having looked at the offer from the EU, the Department concluded that it had come too late and that it was too inflexible, in practice, for many programmes to be able to qualify. It would also have incurred significant extra cost and diverted resources from other key programmes. However, there are still applications in the pipeline for Cornwall—including grant funding to support the transition of Newquay airport from military to civilian use—which, if agreed, would increase the European regional development funding awarded to Cornwall county council from £11.7 million to £14.4 million.

Anne McIntosh: In the past, did not North Yorkshire and Yorkshire and Humberside get substantial amounts of money from EU regional development funds? That money is no longer available, yet we are now funding huge cohesion funds for other European countries. Will the Minister stand up for the regions of this country to ensure that we get our fair share?

Yvette Cooper: The hon. Lady will be aware that we support substantial investment in the UK regions. Clearly, the criteria for EU help for particular regions changes over time, which reflects the changing positions in the regions, not only in the UK but across Europe. She will know, as a fellow Yorkshire MP, that we have seen substantial growth and investment in the Yorkshire economy, and that the Yorkshire regional development agency, which gets substantial investment from the Government, has been critical in helping to support Yorkshire businesses through the downturn and through the pressures that we face. That is the kind of investment in the regions that we never had in the past, and there is a substantial difference between the way in which we are responding to this downturn and the way in which the Conservative Government responded in the 1980s.

Fiscal Policy

Adrian Sanders: If he will take steps to ensure that his Department's fiscal policy prevents women from being disproportionately affected by the recession.

Yvette Cooper: We believe that it is right to try to support everyone through the difficult times, and that includes looking at the different impact of problems on women and men through the recession. The £60 pensioners' increase in January and the bringing forward of child benefit will particularly help women and families.

Adrian Sanders: Like many seaside resorts, my constituency has an above-average number of women in employment. Sadly, a high proportion of them are the main breadwinner. That is why this is an important issue for my constituency. The TUC has said that "creative means" will be required to protect women's jobs and to increase the opportunities for new vacancies. What creative means does the Minister have planned to ensure that jobs for women are protected or created?

Yvette Cooper: The hon. Gentleman is right to say that we want to support jobs, and people, through this. That includes, for example, the fiscal stimulus—cutting VAT and putting billions of pounds into the economy to help us through. Had that been done by the then Government in the early '90s, it could have helped to protect 300,000 jobs. The fiscal stimulus is hugely important, as recognised by Governments across the world. It is about helping to support jobs, and it is unfortunate that other parties have not supported it.

Sally Keeble: In looking at reports suggesting that the recession has impacted particularly on women's employment, is my right hon. Friend concerned about the very many women who work, often part time, on the front line in the financial services industry and who do not get bonuses and are on modest salaries? I speak as a woman who has sat through many hours listening to male bankers talking about the crisis that they precipitated, so does she agree that a bit more diversity on the boards of these banks might actually help to improve the quality of the decision taking?

Yvette Cooper: My hon. Friend is right. Investigations have been launched, as she will know, to look at issues around diversity in the City and the way in which men and women have been paid, including bonuses, in the financial services industry. It is also, I think, important to recognise that there may be differences in the impact on employment. So far, unemployment over the past 12 months has increased by less for women than for men at the national level, but there are very wide variations at the regional level. My hon. Friend is also right to highlight the importance of looking at part-time employment. It is also the case that the tax credit system might help some people who see a cut in their wages, for example, as it can help to cushion them from the impact of what might otherwise be difficult circumstances.

Mark Lazarowicz: I received an e-mail on this issue this morning from a constituent who strongly suggested that the bonus culture in some financial institutions—I do not mean at the top, but much lower down—has an inherent tendency to discriminate against women who, as a result, tend to suffer from lower pay and are more likely to be chosen for redundancy. In looking at the bonus culture, will my right hon. Friend ensure that we focus not just on what happens at the top but on how it works down throughout these organisations? Changing the boards in the way my hon. Friend the Member for Northampton, North (Ms Keeble) suggested might provide a way of ensuring that this matter is taken seriously by the banks and other financial institutions.

Yvette Cooper: My hon. Friend makes an interesting point about the way in which performance-related pay or different bonuses may be decided on and raises questions about whether there might be discrimination or unfairness as those decisions are taken. It is thus right that, in addition to looking at how to prevent an unfair bonus culture that overly rewards excessive risk across the financial sector, we should also look at whether any discrimination is taking place. My hon. Friend may be aware that my right hon. and learned Friend the Minister for Women and Equality has instigated work in this area.

Global Economic Situation

Ben Chapman: What discussions on the global economic situation he had with Chinese Ministers during the recent visit of Premier Wen Jiabao to the UK.

Stephen Timms: The talks on the economic crisis with my right hon. Friends the Prime Minister and the Chancellor addressed preparations for the London summit, avoiding protectionism, moving towards a low-carbon economy and reform of international financial institutions. Both countries aim to double UK exports to China over the next 18 months.

Ben Chapman: Given the importance of the relative slowdown of the Chinese economy, was the opportunity taken to discuss with China the scale and nature of its financial stimulus package and its likely speed of effect so that it improves the Chinese economy and, with it, that of the rest of the world?

Stephen Timms: Yes, that certainly was discussed. My hon. Friend knows China extremely well, so he will know that it recently became the world's third largest economy. It is going to be one of the fastest growing this year, but it has been deeply affected by the crisis, and some 20 million migrant workers have returned home after losing their jobs on the east coast. I was in China last month for the G20 preparations and I discussed with officials and others in Beijing what was happening in the Chinese economy. I can say to my hon. Friend that China will be a key participant at the London summit—committed, with others, to a successful outcome, which is so important for China as it is for the rest of the world.

David Gauke: The Government tell us that their growth forecasts are dependent on international co-operation with China and elsewhere. They also claim that other countries are following the United Kingdom's lead in economic policy. If that is the case, presumably the Minister will stand by the pre-Budget report's forecasts on growth—or does he agree with most commentators, including the Governor of the Bank of England, the Secretary of State for Health and the Secretary of State for Children, Schools and Families, that the recession will be much deeper?

Stephen Timms: As the hon. Gentleman knows, we will publish updated forecasts at the time of the Budget, as normal. They will include a full assessment of developments and prospects for the United Kingdom and the global economy.
	Just a couple of weeks ago, the Institute for Fiscal Studies said that
	"our central forecast is that the UK will avoid deep and prolonged recession thanks to the enormous monetary and substantial fiscal stimuli already announced."
	We are taking the action that is needed domestically, which contrasts with the do nothing policies of the hon. Gentleman's party.

Kelvin Hopkins: The globalised neo-liberal economic model has proved to be inherently unstable, and has brought mass unemployment to China as well as elsewhere in the world. Did my right hon. Friend discuss with the Chinese the possibility of a fundamental reorganisation of the world economy, perhaps on Bretton Woods lines, and did he read Anatole Kaletsky's article in  The Times on Monday, calling for what he called a "paradigm shift" in economic arrangements?

Stephen Timms: There are lots of interesting ideas around at the moment. What I can tell my hon. Friend is that, as I indicated earlier, the reform of international financial institutions was one of the topics discussed by my right hon. Friend the Prime Minister with Premier Wen in London, and it is certainly one of the topics being considered in preparation for the London summit. I think that we shall need to see some significant changes.

Mark Field: What steps is the Minister taking to work closely with the Chinese businesses based here in England—both large and small—which will play an important part in ensuring that we retain the links between our two countries, not just now but in the decades ahead?

Stephen Timms: The hon. Gentleman has made an extremely good point. The United Kingdom economy benefits substantially from Chinese investment in the United Kingdom; I believe that we are the biggest recipient in the European Union. We also have the China-Britain Business Council, which does important work. The relationship is very important to us economically, and also, as Premier Wen emphasised, very important to China.

Banking Industry

James Plaskitt: What assessment he has made of the effectiveness of internal risk rating as a basis on which to operate international banking supervision.

Ian Pearson: Internal risk models for United Kingdom banks are required to be approved for use by the Financial Services Authority. Internal risk rating is complemented in the Basel II framework—and, in EU law, the capital requirements directive—by a requirement for supervisors to undertake supervisory reviews of the banks' risks and make appropriate adjustments as required. The framework also incorporates a third pillar: disclosure of key supervisory requirements of a bank to ensure market discipline.

James Plaskitt: Northern Rock's banking practices were compliant with the Basel accords, so I think that this can be described as, in effect, a highway code written by boy racers. The system effectively hands all the risk assessment over to the banks themselves, and is fatally flawed as a result of being allied to a system of balkanised regulation. It does not need tweaking; it needs fundamentally changing. Will we try to get some proper, global banking regulation out of the G20 talks?

Ian Pearson: I think that the G10 regulators and people in the central banks who worked on Basel II will be surprised to hear themselves described as boy racers. They may be pleased to be regarded as so youthful. But I think the only boy racer when it comes to regulation is the shadow Chancellor, the hon. Member for Tatton (Mr. Osborne), given his earlier policy proposals in this context.
	My hon. Friend has raised an important point about banks and their internal risk modelling, which must be approved by the Financial Services Authority. The Chancellor has been at the forefront of international discussions about future arrangements. We believe that improvements are needed to the Basel II process, and it will certainly be a major topic of conversation at the G20 Finance Ministers' summit.

Greg Hands: On two occasions, both the Prime Minister and the Chancellor have failed to express confidence in Glen Moreno, acting chairman of UK Financial Investments Ltd, the body entrusted with risk-managing our bank holdings. Can the Minister tell us when he will appoint a permanent chairman, and will he confirm that Mr. Moreno will not be a candidate?

Ian Pearson: I welcome the hon. Gentleman to the Dispatch Box for the first time, and I refer him to the comments made previously by the Chancellor.

Stewart Hosie: The April 2007 Bank of England financial stability report documented a number of risk management weaknesses: weakened credit risk assessment; impaired risk monitoring; and over-reliance on risk assessments. It then glossed over those when it said that
	"the growing use of credit risk transfer markets have increased the risk-bearing capacity of the system".
	That is incredible when one looks back at what has happened. Can the Minister instruct the Governor of the Bank of England to pay much more attention in future stability reports to explicit risks and far less attention to glossy commentary?

Ian Pearson: The hon. Gentleman served on the Banking Bill Committee, on which I led for the Government. Like me, he will be aware that statutory responsibilities are to be given to the Bank of England through the Banking Bill in just the areas that he is discussing.
	Topical Questions

James Brokenshire: If he will make a statement on his departmental responsibilities.

Alistair Darling: The Department's responsibilities remain as I set out last December. With your permission, Mr. Speaker, I can tell the House that, following the meeting of the G20 countries in April, this year's Budget statement will be on 22 April, when the House will have returned after its Easter recess.

James Brokenshire: Can the Chancellor say what estimate he has made of the number of firms and businesses likely either to cease trading or to go out of business as a consequence of the forthcoming 5 per cent. increase in business rates?

Alistair Darling: What I can tell the hon. Gentleman is that the measures we have put in place to support small businesses in relation to lending will help many businesses to deal with the costs they meet, in addition to helping them get through an extremely difficult situation—we will continue to do that. Other measures, for example, the empty property relief that I announced last November, will help people and businesses get through this difficult time. I will continue to keep under review, at the Budget and at other times, what else we can do to help small businesses.

Tom Levitt: Talking of those measures that the Chancellor has mentioned, I understand that the time to pay initiative introduced by Her Majesty's Revenue and Customs has been much appreciated by small businesses that have taken advantage of it. Does he have any figures that can objectively tell us what the take-up has been, and what the benefit has been to small businesses?

Stephen Timms: My hon. Friend is right to mention the very good response that there has been to this initiative. More than 60,000 businesses have benefited from the time to pay arrangements, including 191 in Derbyshire. In total, those businesses have agreed arrangements to spread tax payments worth more than £1 billion, so the scheme has been very effective. I know from what businesses have said to me and from what a number of Members of the House have reported to me and to other Treasury Ministers on behalf of businesses in their areas how successful and highly welcomed this scheme has been.

Philip Dunne: Has the Chancellor exhausted his fiscal stimulus? If not, what is the limit of the stimulus that he intends to impose?

Alistair Darling: I thought that my right hon. Friend the Financial Secretary had just indicated one of the benefits that the fiscal stimulus has been giving to businesses in this country—£1 billion of help has been given to businesses. That is one example of the difference between a Labour Government who are giving that help and a Conservative party that is absolutely opposed to it.

Anne Snelgrove: My right hon. Friend has brought forward much funding to enable public projects to progress in constituencies such as mine. Will he ensure that MPs are consulted when these public projects are brought forward so that we can ensure that they are in the best interests of our constituents, particularly where university funding is concerned?

Yvette Cooper: My hon. Friend is certainly right to say that bringing forward increased public sector capital investment can help to support jobs in every constituency across the country—we think that it will help to support thousands of additional jobs. I am happy to talk to her further about what additional information she would like either from the Treasury or from individual Departments, which are, of course, supporting the major capital investment, not just across the higher and further education sectors, but across transport and other areas of infrastructure—it is all, sadly, opposed by the Conservatives.

Julie Kirkbride: Among the poor judgments made by the Chancellor was that of asking Sir James Crosby to produce a report that recently concluded that the taxpayer should buy up the bad debts of the banks. Now that we know the level of complicity that Sir James had in producing those bad debts at his old bank, does the Chancellor still intend to press ahead with the conclusions of that report without question?

Alistair Darling: The hon. Lady is mistaken about what James Crosby actually proposed. He was not dealing with the question of the bad assets in the banks—that was being dealt with separately. He was asked to consider how to get mortgage lending going again—again, at the time, that was something that the Conservative party was in favour of. He suggested that the Government should underwrite some of that new lending. That has a great deal of merit, and it is something that I set out in the pre-Budget report. I am afraid that the hon. Lady was just plain wrong in what she said.

Jo Swinson: This week, one banker has described a salary of £1 million as "modest" and RBS has proposed obscene bonuses of £1 billion. Will the Chancellor now stand up for the taxpayers who own great chunks of the banks and demand a freeze on bankers' bonuses?

Alistair Darling: The hon. Lady will be aware that when we recapitalised the banks in October, we imposed restrictions on the payment of cash bonuses to board members. I believe that bonuses should reward success, not failure, and many people who work for banks are not well paid in comparison with some of the people at the top. If the former work hard, they should be rewarded for doing so. I agree with the hon. Lady that people who are associated with the losses should not receive anything, and we must end the culture that has encouraged people to take reckless risks that the boards of the banks patently did not understand. It has had disastrous consequences for them, for this country and for the rest of the world.

Hugh Bayley: This downturn affects the whole world, and does not that underline the importance of working with our partners in the European Union and other countries to stimulate demand? What action is being taken by EU members and other countries to address these pressing needs?

Angela Eagle: My hon. Friend is right. The co-ordinated European recovery plan, which was agreed by Finance Ministers and leaders in the EU, includes a fiscal stimulus of a similar size to the one that we pioneered in this country. Germany may have had a few words to say, but it has introduced the largest fiscal stimulus since the second world war, at €82 billion. The French have a €26 billion fiscal stimulus and the Spanish a €25 billion one. Even the Canadians, who used to be on the side of the do nothing party, have announced a $32 billion fiscal stimulus. Everyone is doing it but the Tories.

David Heathcoat-Amory: Would the Treasury team confirm that, according to the pre-Budget report, our net contributions to the EU budget this year will be £2 billion, which will rise in two years time to £6.5 billion? Do they think that, in a recession, it is sensible for us to more than treble our contributions to the EU budget, especially when the European Court of Auditors has refused to sign off the accounts for 13 years because of the waste and mismanagement? Can Ministers think of a better way to spend that sum in this country in a recession?

Angela Eagle: The right hon. Gentleman makes some interesting points, but it is also important to remember that we are pioneers in ensuring that the EU budget is spent appropriately. We always raise that point in all the meetings that we have. I also note that €30 billion of the EU fiscal stimulus—which the Tories oppose, but which will help to revive all of our economies—will come directly from the EU budget.

Paul Flynn: Given the dreadful price paid by this country in blood and treasure after the previous surge of troops in Afghanistan in 2006, may we have an assurance that, before another surge is contemplated, we will have before us a full financial appraisal?

Alistair Darling: My hon. Friend will know that the Government remain committed to supporting our troops, who are carrying out an extremely difficult and dangerous task in Afghanistan. We believe, of course, that our contribution should be made alongside contributions from other countries too. This must be an international effort, and the burden cannot lie on the shoulders of a few. Our commitment to ensuring that we see the matter through with other countries remains as strong as it ever was.

Henry Bellingham: In her reply to the hon. Member for South Swindon (Anne Snelgrove), the Chief Secretary said that expenditure on public works would be going up during this vicious recession. In the current financial year, the Treasury will raise roughly £44 billion from the motorist. How much of that is being reinvested in the road network?

Yvette Cooper: As the hon. Gentleman will know, we are increasing investment in transport and other infrastructure across the board. We are bringing forward capital spending on our transport infrastructure, and that is the right thing to do to support the economy at this time. The Opposition's proposals would amount to a cut of £800 million in transport investment at a time when the economy needs it, in just two months' time. I think that such a cut would be hugely bad for the economy.

Greg Mulholland: On Monday, the Federation of Small Businesses said that the VAT cut had not worked. That is certainly what I am hearing from my local businesses. Denise Harrison, the owner of the small business Complete Image, pointed out that reprinting her price list would cost so much that lowering her prices would not be economic. When will the Chancellor admit that the cut was a gimmick? When will he come forward with proposals that would really help small businesses in my constituency and the rest of the country?

Alistair Darling: I do not agree with the hon. Gentleman. We cut VAT because that was the quickest way to put £12.5 billion into the economy. We are also reducing the amount of tax that basic rate taxpayers pay, and introducing measures to help families with children, and pensioners. It will all make a difference. The Institute for Fiscal Studies is independent of Government, but in its report a couple of weeks ago it said that the temporary cut in VAT that is now in place would be a more effective
	"stimulus measure than its critics suggest."
	In addition, the forecasts in the inflation report that the Bank of England published yesterday made the point that the VAT reduction and the other stimulus that we have put in place, together with the effects of monetary policy and falling energy prices, will make a difference.
	I know that many small businesses are finding it very difficult at the moment to make ends meet, and that many of their customers are cutting back on what they are doing. That is all the more reason, I would have thought, to support putting more money into the economy. We are putting something like £20 billion into the economy over the next year or so, and other countries right across the world are doing the same thing. It will make a difference. There is no quick fix or overnight solution, but the alternative—of doing nothing and letting the recession take its course—was tried in the 1980s and 1990s. It did not work then and it would not work now.

Douglas Carswell: Can the Chancellor please tell the House what the point is in having a Financial Services Authority at all if the Government were either unaware of its concerns about HBOS, or unwilling to make sure that action was taken?

Alistair Darling: I believe that it is essential to have an independent regulator such as the FSA. Indeed, the hon. Gentleman might do well to remember that it replaced some seven or eight self-regulatory organisations that, for example, manifestly failed to prevent the mis-selling of pensions in the late 1980s. That is why we set it up. The FSA has a responsibility to regulate the financial services industry. It routinely raises concerns about firms from time to time. It would not routinely report those concerns to the Treasury unless at that time it felt that there was a major systemic risk. Clearly, it did not feel that such a risk was evident when it carried out its investigations, because it did not report any suspicions to the Treasury at any point. However, I do not think that one can argue from that that there should not be independent regulation of the financial services industry. That position is just patent nonsense.

Richard Spring: Has the Treasury made an assessment of the role and influence of external credit agencies in the analysis of financial regulation for our financial services industry?

Alistair Darling: Yes, we have, and I agree with the point that I think that the hon. Gentleman is getting at. Credit rating agencies are a useful aid to decision making, but they cannot be a substitute for decision making on the part of boardrooms. People need to decide whether a risk is good or not or, if there is a risk, how they are going to price it. To do that, they should, of course, refer to credit rating agencies but that should not be the last word. Other issues are involved, such as the conflict of interest that arises when credit rating agencies certify products in which they have a financial interest. However, these are all issues that we have raised at the Financial Stability Forum, because the problems need to be dealt with at an international level. They cannot be dealt with in any one country alone.

Stephen Crabb: What is the Minister's latest assessment of the number of jobs currently being lost from businesses located in British ports, as a result of the appalling and wholly unjust decision to levy three years of business rates retrospectively on port tenants, many of whom are now being pushed to the brink of insolvency, as a result of their new and unexpected tax liabilities?

Angela Eagle: My right hon. Friend the Minister for Local Government has recently announced to the House, following our announcement in the pre-Budget report, an unprecedented period of eight years to pay back these liabilities, which are properly and rightly assessed, as happens routinely with all business services. There is an eight-year pay-back period; it is interest free; and it should offer a great deal of help.

Andrew MacKay: Returning to Mr. Glen Moreno, does the Chancellor of the Exchequer not understand that it was a gross error of judgment to appoint that Liechtenstein-based banker, who specialises in tax avoidance, to look after taxpayers' interests in our banks?

Alistair Darling: As I said earlier, Mr. Moreno is taking that job on an acting basis until we can appoint someone on a permanent basis, but the right hon. Gentleman's protestations about tax dodging and people not paying taxes in this country when they should would have far more credibility— [ Interruption. ]

Mr. Speaker: Order. Let the Chancellor answer. It may not be the answer that the right hon. Gentleman wants, but let him answer.

Alistair Darling: The Opposition do not want to hear the answer, because there are some uncomfortable truths—some of them sitting not very far away from this place.

Business of the House

Alan Duncan: May I invite the Leader of the House to give us the forthcoming business?

Harriet Harman: The business for the week commencing 23 February will be:
	Monday 23 February—Second Reading of the Apprenticeships, Skills, Children and Learning Bill.
	Tuesday 24 February—Opposition Day (6th allotted day). There will be a debate on an Opposition motion. Subject to be announced.
	Wednesday 25 February—Remaining stages of the Saving Gateway Accounts Bill.
	Thursday 26 February—General debate on Welsh Affairs.
	Friday 27 February—Private Members' Bills.
	The provisional business for the week commencing 2 March will include:
	Monday 2 March—Conclusion of the remaining stages of the Political Parties and Elections Bill.
	Tuesday 3 March—Motion to approve the draft Prevention of Terrorism Act 2005 (Continuance in Force of Sections 1 to 9) Order 2009, followed by Third Reading of the Corporation Tax Bill, followed by House Business.
	Wednesday 4 March—Consideration of an allocation of time motion, followed by all stages of the Northern Ireland Bill.
	Thursday 5 March—General debate on international women's day.
	Friday 6 March—Private Members' Bills.
	As the Chancellor has told the House, the Budget statement will be made on 22 April.

Alan Duncan: May I thank the Leader of the House for giving us the business? However, the truth is that very little serious Government business is being brought to the House, but massive issues of importance are being announced outside it. Can she explain, for instance, why the Secretary of State for Health seems to want to deny Members the opportunity to debate a key matter such as dementia? Moreover, we have been waiting for the child health strategy for five months. It is a very important issue, yet it has only been announced today in a written statement. Indeed, today, as we rise for a half-term break, we find that there are no fewer than 39 written ministerial statements published. Is she really happy with the practice of announcing them at one fell swoop just as people are about to disappear?
	May we have a statement from the Chancellor on the extraordinary behaviour in front of the Public Administration Committee yesterday of the Economic Secretary to the Treasury, the hon. Member for Dudley, South (Ian Pearson)? His derogatory remarks to a member of that Select Committee, and his comments on Equitable Life, caused uproar. Once again, may I ask for a debate on Equitable Life, and the disgraceful way in which the Government are treating those who have lost their pension? How can the House be said to be doing its job properly when it establishes a system of redress and then wantonly ignores that system in such a callous and unpleasant way?
	Likewise, if we believe in ourselves, we must seek to educate people about what we do here. Will the Leader of the House confirm that she will help the Youth Parliament to hold events in the Palace of Westminster to teach young people about the vital importance of politics and political engagement?
	On Tuesday, we saw the spectacle of bank bosses apologising in the Treasury Committee. May we have a similar statement of apology from the Prime Minister? Yesterday we learned that officials at No. 10 are being instructed to compile a DVD of President Obama's greatest apologies, to teach the Prime Minister how to say sorry. We very much hope that such a statement will be delivered to the House, and that he will practise properly in front of the mirror beforehand. Is it his intention, in that same statement, to confirm the status of Glen Moreno, who chairs the trust that holds the shares that bought the banks that saved the world, albeit, sadly, through tax havens in Liechtenstein? With Sir James Crosby being sacked yesterday, and Mr. Moreno being downgraded a few minutes later, is it now confirmed that Mr. Moreno is on the way out altogether?
	May we have a debate on unemployment? The dire figures published yesterday, pushing against the 2 million mark, were a brutal confirmation of the Governor of the Bank of England's assessment that Britain is now in "deep recession". We also gained an insight into the nationality of those who are employed. We learned that in 2008, employment of workers born in the UK fell by 278,000, while employment of foreign workers rose by 214,000. Where does that leave the Prime Minister's claim that he wants to create British jobs for British workers?
	Finally, on stepping down from jobs, may we have a debate on political blogs? I am not sure whether the right hon. and learned Lady is aware of the blog of a Labour councillor from Hackney, who is convinced that he has a winning strategy for the Labour party. He has written what he calls his "unsolicited advice to Gordon". He says:
	"Harriet Harman has too many jobs and isn't very good at hiding that she wants to add yours"—
	that is, the Prime Minister's—
	"to the list. Removing her role as Party Chair will...remind her who is boss."
	So who is the boss? Who is wearing the trousers in the Labour party now? How many jobs does the right hon. and learned Lady hold, and is it not sadly the case that we have a crisis in the labour market, a crisis in the Labour party, a Prime Minister who will not apologise, and a Leader of the House who is unapologetic about wanting his job?

Harriet Harman: The hon. Gentleman raised a number of important points about our health strategy, child health, the dementia strategy and the importance of memory clinics; I will look at the forthcoming business of the House and see whether we have enough opportunities to debate those important issues, alongside the important issue of the economy, which I know the House wants to prioritise. Of course, the Conservatives have an Opposition day debate in the week in which we get back, so he could consider making the issue the subject of that debate.
	The hon. Gentleman mentioned the 39 written ministerial statements that are being issued today. Something like 24 of those are spring supplementary estimates. It is custom and practice for the spring supplementary estimates to be given by way of written statements to the House. I think that that is perfectly in order. If he wants us to do things differently he is welcome to make suggestions.
	We have already discussed the position on Equitable Life, which was set out by the Chief Secretary to the Treasury in an oral statement, and she was answering questions just this morning. We all share the view that those who have been the victims of gross mismanagement by the management of Equitable Life and who are not protected because of a failure of regulation are owed an apology, and there needs to be financial compensation or financial recompense. That will be taken forward.
	The hon. Gentleman raised the question of the Youth Parliament. I agree with him: it would be right for the Youth Parliament of this country to be able to sit in the Chamber when the House is not sitting—obviously, not when the House is sitting, but in recess. We need to encourage young people to see our democracy at work and to imagine themselves playing a part in it. We tabled a motion that was before the House last night, and it was objected to. I ask the hon. Gentleman to work with me to persuade his right hon. and hon. Friends who objected. Their names are on the Order Paper:—
	"Mr Christopher Chope
	Mr Greg Knight
	Sir Nicholas Winterton
	Philip Davies
	Sir Paul Beresford
	Mr Humfrey Malins".
	I agree with what the hon. Gentleman said, so he should address himself to his Back Benchers.
	The hon. Gentleman mentioned unemployment. We are extremely concerned about anybody who faces the prospect of losing their job, which is why we have taken all the action we possibly can to stabilise the economy in the face of a global financial crisis and to give as much help to businesses as we can. We have been prepared to see Government borrowing rise in order that we can defer tax requests to small businesses, and about 30,000 businesses have been helped by not having to pay their tax. The only way to allow them to do that is to allow Government borrowing to rise, so we have, as the Chancellor has just told the House, put potentially £12 billion into the economy through the VAT cut in order to keep the lifeblood of business flowing and protect people from losing their job.
	When the dreadful blow happens and somebody loses their job, we have taken action to make sure that they do not have to lose their home. Again, that has meant extra public spending, and we have had to allow borrowing to rise to compensate for it—for example, by bringing forward the help on interest payments on their mortgage from 39 weeks to 13 weeks for those who lose their job. That all costs money, and we have allowed the public debt to rise to provide that help. We are concerned about unemployment, but instead of just saying we are concerned and wringing our hands, we are taking action on it and putting money behind it, compared to what the Tories would do—wring their hands and not put any money up behind it.
	The hon. Gentleman talks about foreign workers, and I must take issue with him about that. We must be very careful not to overlook the role that migrants have played in the life of this country over the centuries. I will share with the hon. Gentleman some figures that I was reading this morning. The House should listen. The figures relate to the Queen Elizabeth II hospital in Welwyn Garden City. In the Welwyn Hatfield area 6 per cent. of the population are from black and Asian minority ethnic communities, but of the people who work in the hospital, 50 per cent. are black and Asian. Migrants to this country are more likely to be standing at our bedside saving our life than lying in a hospital bed. We must recognise the role in the economy and our public services played by people who were not born in this country. Indeed, many hon. Members were not born in this country, so I do not agree with the hon. Gentleman's approach.
	In conclusion, the hon. Gentleman made a load of snide remarks about the Prime Minister, and he made snide remarks about me, too. I am disappointed. I know my hon. Friends warned me, but I said the hon. Gentleman was different. They said, "He's just a Tory. He's the same as all the others," but I said, "No, I think he's different." I even bought him a Valentine's card, and I thought me might buy me, or rather get me, a little trinket from the Sultan of Oman. It is clear now that he is the same as all the others. He does not see things in the way that I do, and he does not believe in the things that I do—he does not believe in helping people, if they get into difficulties; I do. We started off well at the beginning of the year, but it's over!

David Chaytor: I endorse the shadow Leader of the House's request that the Youth Parliament be able to use the Chamber for its meetings. Next week, during the recess, the Youth Parliament is holding a conference in London on concessionary fares for young people, and it is obviously sensible for that conference to be held in this Chamber while we are in recess.
	In the context of the work of the Youth Parliament and the issue of engagement by young people, can the Leader of the House find time for a debate on youth affairs? Should we not have an annual debate on youth affairs? We have annual debates on fisheries and on Welsh affairs, but the number of young people in the United Kingdom is far greater than the population of Wales. Would that not be an important step forward in raising the profile of the issue of the disengagement of young people from politics? Young people in my constituency have been served excellently by our outstanding member of the Youth Parliament, Catherine Rawsthorne, who would be delighted to have the opportunity to speak in this Chamber.

Harriet Harman: I thank my hon. Friend for his support and for raising the good work of the Youth Parliament. Just as I have announced the annual debates on Welsh affairs and on international women's day, the House may want to consider the idea of an annual debate on youth affairs to give a sharper focus to the concern across the House about youth affairs.

David Heath: I certainly do not intend to be snide—these Benches are a snidety-free zone.
	I want to pick up the point made by the hon. Member for Rutland and Melton (Alan Duncan) about written statements. The Leader of the House and her predecessor said that the House should not be bombarded with vast quantities of statements immediately before a recess. That used to happen before the long recesses, but now there are 39 statements before a one-week recess. It is not the fact that the statements have been made; it is the timing and the fact that they have all been released on the same day before a recess. That cannot be right; will she please look into the matter for us?
	I mentioned the weather conditions last week. Snow in my constituency gave way to floods, and we experienced severe flooding before Christmas. It would be helpful, when people have recovered from the difficulties that they have experienced, to hold a debate in this House on the resilience of local communities to adverse weather conditions, how we can make better preparations, how we can properly assess risk and how we can enable local communities and volunteers to play a better part in dealing with adverse weather conditions. Can we have a debate on that?
	Immediately after today's statements, there is a debate on social security and pensions uprating. I suggest that we should also have a general debate on pensioners. A lot of pensioners are finding life extremely difficult at the moment with the return from savings down, pensions not going very far and difficulties with keeping themselves warm over winter and with council tax—there are a lot of factors. Before the 11 wasted years of Labour Government, the Prime Minister said:
	"I want the next Labour Government to achieve what in 50 years of the welfare state has never yet been achieved—the end of the means test for our elderly people."
	Well that was another great success over the past few years. We should have a debate on the position of pensioners and how we can properly deal with people in old age.
	Lastly, may we have a debate on the future of the British pub? It is a fact that 39 are now closing every week. Insolvencies in the sector have gone up by 45 per cent. in the last quarter. The Chancellor of the Exchequer is barred from practically every pub in the country; that is not surprising, given that his response to the crisis in the pub trade has been to increase beer and cider taxes—that is resented, to say the least. May we have a debate on what we can sensibly do to protect what is a key part of many local communities up and down the country?

Harriet Harman: I will look into this, but I think that I am right in saying that there is an expectation that we brigade the spring supplementary estimates and publish them at the same time, in a co-ordinated way, so that people know when to expect them. I think that there is a purpose in brigading them all together, and that that is why they have come out just before this recess. However, I will look into the matter. Obviously, if there is a proposal that the publication of the spring supplementary estimates be staged rather than being done at once, and if hon. Members want that change, we will consider it.
	The hon. Gentleman mentioned the question of resilience to extreme weather conditions. The Secretary of State for Transport is considering our response to the snow, icy weather and floods and will issue a written ministerial statement about the lessons that have been learned from his review of the response all around England, Scotland and Wales. The draft floods Bill, on structural changes in how we deal with extreme floods, will be issued shortly and no doubt the hon. Gentleman could contribute to that.
	The hon. Gentleman mentioned pensioners and whether we should have a debate on the effect of the economic recession—the global financial economic crisis—on those in retirement. By way of background, I should say that he should bear in mind that retired people—particularly older pensioners, the overwhelming majority of whom are women—have been the biggest beneficiaries. Their incomes have risen more than those of any other group in society, and quite right too. There was an appalling problem of pensioner poverty and many steps have been taken to address that over the years.
	Having said that, I recognise that many pensioners are worried about not getting income from their savings and the fact that fuel bills are a disproportionately high part of their household budgets. We are trying to take all the steps that we can to give them the help that we can. Again, that has implications for public spending. That is why we are prepared to allow public borrowing to rise. If that means extra insulation, winter fuel payments and putting in £60 extra and bringing the payment forward to January for all pensioners, we are prepared to do it. I know that the hon. Gentleman and his party back us on that. However, it has implications for public spending and we are prepared to face up to them.
	The hon. Gentleman also talked about the pub industry, and I know that there is a real problem. Pubs play a big part in community life in rural and urban areas, but as people worry about how the recession might affect their families, they start cutting back on going out and on outings. That is why we wanted to ensure that we were putting money directly into the economy in every way that we could. I am disappointed, therefore, that the hon. Gentleman's party does not back the VAT cut. We will do everything that we can, through both the Department for Culture, Media and Sport and the Department for Business, Enterprise and Regulatory Reform, to help the pub trade.

Jim Sheridan: May we have a debate on the powers contained in the Scotland Act 1998? My right hon. and learned Friend will be aware that this House is responsible for overseeing and administering parliamentary elections in Scotland. At the last parliamentary elections there, many of my constituents were encouraged to vote for a particular party on the basis that it would scrap council tax and introduce a local income tax. That party has now reneged on that promise. Does my right hon. and learned Friend agree that, given that, that party should return to the ballot box?

Harriet Harman: People in my hon. Friend's constituency and throughout Scotland will have been able to see the cynical way in which the Scottish National party made promises about cutting council tax and the debacle that has now come about. As my hon. Friend knows, we have set up the Calman commission to look at the whole question of governance. I am sure that we will be able to take that matter forward.

Greg Knight: May we have a debate on the cost effectiveness of park-and-ride schemes? Although they may be viable in a few large cities, I am increasingly concerned that in many towns they are a thorough waste of money and should be abolished. Just a fraction of the money saved could be used to provide free car parking. If we cannot have a debate on the issue, will the Leader of the House please pass on my comments to the Secretary of State for Transport and ask him to look at some of the smaller schemes to see whether we are getting value for money? I believe that we are not.

Harriet Harman: Many park-and-ride schemes help cut congestion and pollution; they work very well in some places, although the right hon. Gentleman says that in others they do not. Perhaps he could choose the subject for an Adjournment debate—or a debate in Westminster Hall, as other Members might want to share their concerns as well. There would then be a response from a Transport Minister.
	I hope that the right hon. Gentleman will think again about the Youth Parliament. As Chairman of the Procedure Committee, he is a beacon of changing procedure in the House and a considerable advocate of modernisation. I am sorry that he cannot answer me now, but I hope that he will change his mind and let the Youth Parliament sit in this House.

David Drew: My right hon. and learned Friend and the hon. Member for Somerton and Frome (Mr. Heath) have referred to the weather, which has been rather inclement in the past week, to put it mildly—we have been slipping and sliding all over the place. The situation was not helped by the fact that Gloucestershire county council seemed to run out of salt. Is that not worthy of a debate and investigation, not least because if the council had not invested its money in Icelandic banks, it could have put the money to good use on the roads? With that in mind, should we not also be considering what advice it received, so that we can see why it put the money into Icelandic banks?

Harriet Harman: The extreme weather conditions have underlined the importance of the work of local authorities and the co-ordinating role of central Government. The Prime Minister was right to point out yesterday that cuts in investment in local and central Government would have made those matters even worse. As I said, the Secretary of State for Transport is learning the lessons from all around the country, and I think that at the moment his plans are to issue a written ministerial statement. No doubt, however, he will review the findings and see how best to handle the issue.

Ian Liddell-Grainger: Unfortunately, the Leader of the House was not at the Public Administration Committee yesterday, when the Economic Secretary to the Treasury, the hon. Member for Dudley, South (Ian Pearson), appeared before us. What he said was completely unacceptable. He lost his temper with an hon. Member of this House and gave no justification as to how the deregulation is going to work—

Mr. Speaker: Order. I must interrupt the hon. Gentleman. I know that he does not intend to break any rule, but there is a tradition in the House that an hon. Member should be warned if his or her conduct is to be attacked in the House. We are talking about the business for next week, so we will leave the matter. It is clear that the hon. Gentleman to whom he has referred has not been notified.

Lindsay Hoyle: Will my right hon. and learned Friend consider having a topical debate on the success of free pensioner travel and whether we could extend it to cover trains? Furthermore, could we extend it to the young people of this country, so that schoolchildren and students travel free, as pensioners do? There have been great benefits and the scheme has been a great success. The Government should be proud of it, and if it can be extended to other people, that would be even better.

Harriet Harman: That is a very good suggestion for a forthcoming debate, and I will consider whether it can be the subject of a topical debate.

Elfyn Llwyd: I suspect that the Leader of the House is not aware of the huge concern in the agriculture industry about the forthcoming new regulation on the tagging of sheep. It has been shown to be ineffective; it simply does not work and it is very expensive. May we have a debate in Government time so that some of us who care about agriculture can address the issue and try to persuade the Government to seek a derogation, as other states are doing, when pointless regulation is imposed on their farmers?

Harriet Harman: I am aware that this is a matter of concern which has been the subject of national debate. Environment, Food and Rural Affairs questions take place during the week that we get back, and I am sure that the hon. Gentleman will look for an opportunity to raise the issue then.

Paul Flynn: When can we have a debate on how we restore the damaged reputation of parliamentarians? If the recent examples of alleged conduct by Members of both Houses are true, and within the rules, then the rules are defective and need to be rewritten. For a start, could we introduce a mandatory register of interests of lobbyists and put in the public domain the locations—not the addresses but the locations—of our main residences?

Harriet Harman: The possibility of a register of lobbyists was raised with and answered by the Prime Minister yesterday. The Minister for the Cabinet Office also talked about it yesterday. The Public Administration Committee has conducted an investigation into it and has made some recommendations that are being considered by the Cabinet Office, which will respond to that report. As for the rules about parliamentary allowances, we have just rewritten them, set up a new system of audit, and agreed a new, in-depth publication scheme. Some of the vagueness of the previous rules has been addressed in our new rules, which as far as the National Audit Office is concerned are firm and clear enough to be the basis of a full-scope audit.
	The matter of second interests—outside financial interests—has been the subject of controversy in the House of Lords. My hon. Friend will know that that is the subject of an investigation by the Privileges Sub-Committee, as the Leader of the House of Lords announced. The House of Lords is concerned that there should be a means of disciplining, expelling or suspending its Members, which it does not currently have. I have been looking at our own Register of Members' Interests, and I wonder whether we need to be more transparent about MPs who are earning money outside of their earnings as a Member of Parliament and whether we should publish more information about what that money is being earned for and exactly how much is being earned.

Nicholas Winterton: I fully support the Liberal Democrat shadow spokesman on the crisis facing pubs, and I hope that the Government will pay attention to that and come forward with some proposals, but may I press the Leader of the House on matters relating to pensioners, particularly those who rely, or have relied, on their investment income and savings to maintain a reasonable quality of life? Their financial position has been devastated in recent months. Could we have a debate on that, even a short one such as a topical debate, so that we can highlight the particular problems facing pensioners—the majority of whom, by the way, are women?

Harriet Harman: The hon. Gentleman's question reinforces the point that we should perhaps look for an opportunity to discuss issues relevant to those in retirement—pensioners—such as travel and savings. That might be a subject for a topical debate.

Kelvin Hopkins: My right hon. and learned Friend will be aware that there are still dramatic differences between the performance of schools, even in areas of similar social composition, and even in the case of the Government's much-vaunted academies programme. May we have a debate in the Chamber on the matter of teaching methods and philosophies, which is at the root of the fundamental differences between the relative success of those schools? I have raised this problem in the House many times, yet we have never seriously discussed it.

Harriet Harman: I think that overall my hon. Friend will acknowledge that with more investment in schools, more teachers and more classroom assistants, standards have gone up, but obviously we are not complacent and want them to improve even further. Perhaps he might find an opportunity to raise those points with Ministers when we come to the Second Reading of the Apprenticeships, Skills, Children and Learning Bill, which is to be considered on the Monday that we get back.

Michael Spicer: Is the Leader of the House concerned about Members' liability for negligence following the case of the hon. Member for Brentford and Isleworth (Ann Keen)?

Harriet Harman: rose—

Mr. Speaker: Order. We had best be careful, because this matter could be sub judice; it is before the courts at the moment. I am looking into the matter, if that is of any help to the hon. Gentleman, but it is best not to discuss it on the Floor of the House. Hon. Members: What about the general issue?
	Well, we will leave the general issue and that means that we are on safer ground.

Jim Devine: May we have a debate in Government time about telephone charges in hospitals? Last week, I had the great honour of becoming a granddad for the first time. [Hon. Members: "Hear, hear."] That joy was tempered by the fact that every time I phoned my daughter-in-law and my son at the bedside, the call was costing 49p a minute from a landline and much more from a mobile phone. This company is operating throughout the United Kingdom, and it is, frankly, ripping off hard-working families at a very emotional time. It is simply a licence to print money. Will my right hon. and learned Friend meet me to discuss this issue?

Harriet Harman: Perhaps I could suggest that my hon. Friend seeks a meeting with other hon. Members, because I am sure that this is a matter of concern more widely across the House; it is not only about phone charges but charges for TV and parking. It is an important issue, and perhaps he could have a meeting with a Health Minister and a Scotland Office Minister to address it.
	Let me take this opportunity to congratulate my hon. Friend on becoming a grandfather and welcoming to the world Erin Molly Devine.

Michael Moore: I welcome the Leader of the House's response to right hon. and hon. Members who have been asking for a debate about pensions. Many of our constituents who have saved for many years are now finding it very hard to get by, with interest rates coming down as they have. Given that she has been responsive on that, may I appeal to her to be more responsive on the issue of Equitable Life? For years now, Equitable Life policyholders have been denied justice, and only recently have they got a grudging apology from the Government and a half-promise that there will be some kind of compensation in future. Rather than waiting for the random chance that this subject comes up at Treasury questions, will she make a commitment that before Easter, in Government time, on the Floor of the House, we will have a proper debate on what the Government are doing about it?

Harriet Harman: It seems as though there is a cluster of issues that I should look for an opportunity to fashion a debate around—from the dementia strategy raised by the shadow Leader of the House, to insulation and energy bills, transport, bus and travel passes for older people, the value of savings, and Equitable Life.

Mark Lazarowicz: May we have a debate on the integrity of the internet? My right hon. and learned Friend will no doubt have seen press reports this morning that reveal that a few minutes after the end of Prime Minister's questions yesterday someone attempted to interfere with the Wikipedia entry on Titian to make it retrospectively consistent with what their party leader had said a few minutes earlier. If the Conservative party is prepared to fiddle the figures with regard to the age of dead Italian painters, surely we cannot trust them on the economy either.

Harriet Harman: rose—

Mr. Speaker: Order. Mr. Binley.

Brian Binley: I was pleased to hear the Leader of the House intimate that she was considering a debate on pensions. Will she extend that to consideration of the public sector pensions problem, which is becoming an intolerable burden on the nation, especially for local government, where a quarter of all locally raised council tax is now used to support pension funds? Will she include that particular matter in the debate that she is thinking of having?

Harriet Harman: It looks as though it is expanding beyond a topical debate into a full-day debate. As well as public sector pensions, which is an important issue, I was thinking, as I listened to the hon. Gentleman's comments, that there is an opportunity to discuss age discrimination and related provisions in the forthcoming Equality Bill. We have added to the list, and I thank him for his suggestion.

Andrew MacKinlay: rose—

Mr. Speaker: Mr. Mackinlay, may I ask you whether you were in for the statement?

Andrew MacKinlay: Just.  [ Laughter. ]
	I have a business question about next Wednesday week—that is original. The Government have announced that Northern Ireland legislation should go through all of its stages on that one day. I have protested about that practice time and time again to Secretaries of State and to the Leader of the House, and they look at me as if I am being unreasonable. They say that it is a one-off, but now it is happening again, and it is an abuse of this House. I hope that the Leader of the House will reconsider the matter, particularly as there are often statements on Wednesday, which further diminish the time available for such a debate.
	The legislation goes to the heart of the political system of Northern Ireland by altering the d'Hondt system. I am not opposed to that, but it is a major piece of legislation and I am protesting about this myself and on behalf of colleagues from Northern Ireland. We should not push the legislation through all at once. We cannot get a copy of the Bill as far as I am aware, so we cannot even prepare and submit amendments. It is outrageous.

Harriet Harman: We want to ensure a full discussion, but we also want to ensure that the Bill, which is an important part of the Northern Ireland peace process, gets through the House as quickly as possible. My hon. Friend will know that the House of Lords Constitution Committee is looking at how we deal with emergency legislation—

Andrew MacKinlay: It is not emergency legislation.

Harriet Harman: It is time critical, and I hope that my hon. Friend will seek a meeting with the Secretary of State for Northern Ireland, who will explain to him why the matter could not be scheduled earlier because agreement had not been reached. The legislation has to be passed within a certain period of time so that the necessary action can follow. I have dealt quite closely with the Secretary of State for Northern Ireland on this matter because I know that the House does not want legislation to be rushed through unless there is a really good reason. Perhaps my hon. Friend and I could meet the Secretary of State for Northern Ireland to discuss the matter, and I am sure that he will be satisfied by what my right hon. Friend has to say.

Bernard Jenkin: May I say how delighted I was when the Leader of the House gave me such a splendid answer the last time I asked her a question? It was about the answers that Ministers should give in response to parliamentary written questions on ambulance trusts, and she said that it was quite unnecessary that we should have to use freedom of information requests to get information out of Ministers that they should give in parliamentary answers. I am now a little disappointed with her after I tabled a question to ask her
	"what meetings she has attended with Mr Speaker on the arrest of the hon. Member for Ashford and the search of his office; what was discussed; if she will place"
	copies of this material
	"in the Library".—[ Official Report, 26 January 2009; Vol. 487, c. 67W.]
	I got the answer that she has regular meetings with the Speaker. I do not think that that was a full and frank answer. Will she now give the House a full and frank answer and place the material in the Library of the House, or do I have to make a freedom of information request?

Mr. Speaker: Order. I can assure the hon. Gentleman that he will not get anywhere with the Freedom of Information Act on that one. That is not a matter for the Leader of the House— [ Interruption. ]

Bernard Jenkin: Unbelievable.

Mr. Speaker: Order. I hope that the hon. Gentleman is not challenging my ruling. It is believable, and he has no right to raise that matter at business questions.

Andrew MacKay: When the House returns after our short recess, the new transitional Government in Zimbabwe will, we hope, be doing their work, and I am sure that I speak on behalf of Members of all parties when I wish Prime Minister Morgan Tsvangirai well in the task ahead. Will the Leader of the House ensure that the Foreign Secretary and the Secretary of State for International Development make a statement at an appropriate time? At some point, we have to make a judgment about lifting sanctions and, more importantly, about increasing aid. The Government have got it right by not doing so yet, but we need to be kept updated.

Harriet Harman: I know that the right hon. Gentleman and the hon. Member for Macclesfield (Sir Nicholas Winterton) have been asking for a debate on Zimbabwe for some time. I have had discussions on that matter and I have identified time for a debate not too long after we get back from the short recess. I hope to be able to announce it soon; I cannot give the House the exact date, but I am on it.

John Bercow: May we please have a full day's debate, in Government time on the Floor of the House, on the relationship between Parliament and the Executive? Given that the scope of Government activity is greater than ever before, and that the operation of the 24-hour media is a fact of life, would the right hon. and learned Lady accept that the responsibility of this House to hold the Executive to account should be our single biggest and most pressing concern? We need to consider what reforms to the composition of Committees and the use of parliamentary time would enable us better to discharge that responsibility in the future than perhaps we do at present.

Harriet Harman: I agree with the hon. Gentleman about the general principles of the importance of our role, and I suspect that behind his comments of principle, he has a number of suggestions. Perhaps I could ask him to come and meet me and he can set out those suggestions in more detail so that we can talk them through.

Mark Hunter: The Leader of the House and all Members will be aware that the National Society for the Prevention of Cruelty to Children is currently waging a high-profile campaign on how we can better protect young people from harm. Given that we all agree that such concerns are of the utmost importance, can the Leader of the House guarantee a debate in Government time on the wider concerns so that individual issues can be addressed?

Harriet Harman: On the Monday we get back we have a Second Reading debate that relates not only to apprenticeships, skills and learning but to children, and perhaps the hon. Gentleman can outline the areas he is concerned about in that debate.

Stewart Jackson: I am sure that the Leader of the House will agree with this point because she considers herself a champion of fairness and equality. May we have a debate in Government time on systematic and institutional discrimination against Christians? We saw last week the case of Mrs. Petrie who was suspended by North Somerset primary care trust and reinstated only after a media furore. This week, anti-Christian zealots in Devon are on the verge of suspending a lady who works in a school for defending her Christian beliefs and those of her daughter. Do fairness and equality apply only to people who are non-Christians in this country?

Harriet Harman: Fairness and equality should apply to everyone, and I suggest that the hon. Gentleman seek a Westminster Hall debate on the issues he raises.

Andrew Murrison: When may we debate yesterday's written ministerial statement on defence planning assumptions? Last month, we had the unedifying spectacle of delays to the carrier programme not being debated properly, or at all, in this House, and the Leader of the House commented favourably on our request that the matter should be brought before the House. I have to say that this is becoming something of a habit with Defence Ministers. Could she encourage her shy and retiring colleagues to come to the House to discuss these matters, which are of vital national importance?

Harriet Harman: We recently had a debate on armed services personnel, and we will shortly be having a debate on procurement for the armed services. We are phasing the carrier programme, which is very important, and there is no way the investment in procurement will be cut back. We have Defence questions on the Monday after the recess.

Nigel Evans: I think that we are pushing at an open door as far as getting a debate on the elderly and pensioners is concerned. The  Lancashire Telegraph in my area covers Chorley and a number of other constituencies, and today it is launching its own campaign for the elderly, raising the profile of the problems that they face such as the recession, high energy prices and access to health care. The number of elderly people in east Lancashire who have died from respiratory diseases in the past six weeks has increased dramatically. Does the right hon. and learned Lady agree that an urgent debate, sooner rather than later, would allow the House to address such real issues?

Harriet Harman: The issues that the hon. Gentleman mentioned could certainly be included in the debate that I said I am considering and I congratulate the  Lancashire Telegraph on raising those issues. That is why we have been so determined to press down food and fuel prices and to do everything that we can to help pensioners in difficult times.

Several hon. Members: rose —

Mr. Speaker: Order. I say to the five hon. Members remaining that if they ask brief supplementary questions, I can take them all.

Julian Brazier: The right hon. and learned Lady would be disappointed if she did not have her weekly update on the farce over the port rating system. Could we have an early debate on Tuesday's statement from the Department for Communities and Local Government that said that port owners must talk to their tenants or be faced with the prospect of empty premises and empty rate policies? That was the day after the Valuation Office Agency confirmed to MPs that port owners will continue to be rated on a different basis so that they would never face any such threat.

Harriet Harman: Unless I am mistaken, that matter was raised in Treasury questions this morning. I know that it is an issue to consider, and it is being kept under review.

Julian Lewis: May we have what I stress must be a general statement by the Leader of the House on the relationship between parliamentary privilege, parliamentary accountability and the separation of the powers that are due to politicians and those that are due to the judiciary? We understand that, not content with previously having ruled that MPs' home addresses should be published regardless of security concerns, while jealously guarding the privacy and security of their own home addresses, judges in courts might now second-guess constituency cases. Given that even the most assiduous of MPs will always have a few constituents who will not accept that nothing more can be done for them, how appropriate is it that judges should second-guess our work? We are responsible to our electors for what we do and do not achieve on their behalf.

Harriet Harman: I thank the hon. Gentleman for his continuing work on Members' home addresses. I hope that there will be agreement on that soon, so that electors can be satisfied that they know whereabouts candidates live without necessarily knowing the actual number of their flat or their street address, if the candidate does not want that known. He has done the whole House a service on that issue.
	We are accountable to the courts in respect of criminal and contract law. If we breach a contract, we can expect to be taken before the courts, and we are accountable as employers under employment law. However, a duty of care to our constituents is set out in the code for Members to which we all subscribe. For that, we are accountable not to the courts but to our constituents at the general election. The courts can get on with criminal, contract and employment law, but when it comes to our duty to our constituents, we have to subject ourselves to the court of public opinion at general elections.

Mark Lancaster: May we have a debate on the future of the Brigade of Gurkhas? I should declare my interest as, I believe, the only Member of Parliament who has served in the brigade. Many comments have been made about the plight of the Gurkhas, most of which have been ill-informed. My personal fear is for the brigade's future. Given the Prime Minister's commitment to British jobs for British workers, does the Leader of the House share my concern that, although the Gurkhas may have won their most recent battle against the Government, they may ultimately have lost the war?

Harriet Harman: There will be Defence questions on the Monday we return, during which the hon. Gentleman can seek to raise the matter. We are proud of the work of the Gurkhas and pay tribute to them for it. Their settlement is under review, and new guidance will be issued shortly.

Graham Stuart: May we have a debate on how rules are applied in the House? My constituents do not understand how some members of the Cabinet are able to prove that their main home is in their constituency by having Sunday lunch there, whereas another escapes investigation while claiming public money to pay for her main family home.

Harriet Harman: No one escapes investigation if there are justified grounds for complaint. The independent Parliamentary Commissioner for Standards will consider complaints and decide whether they merit an investigation. We have clarified the new rules, the House has agreed them and there is an independent element to the process. It does not help anybody if hon. Members make smearing comments about other Members without mentioning their name. It is absolutely clear to whom the hon. Gentleman refers, however, and I am disappointed about that.

Philip Davies: May we have a debate about free speech and political correctness? It is reported in the paper today that a man who worked at a warehouse has been sacked for displaying a  Daily Star poster saying "British jobs for British workers". Is it not ludicrous that anybody could lose their job for displaying such a slogan, or does the Leader of the House believe that anybody who uses that slogan should be sacked?

Harriet Harman: I am delighted that the hon. Gentleman urges me to have a debate about political correctness. The answer to that might be yes, and I am sure that he will want to congratulate the leader of his party on insisting that a Tory candidate take down a nude pin-up that he was displaying in his office. I am sure that he agrees with his party leader about that.

ROYAL ASSENT

Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:
	Banking Act 2009

New Trains (Investment)

Geoff Hoon: With permission, Mr. Speaker, I would like to make a statement about new investment for our railways. The House will understand that, because of the significant and sensitive commercial nature of this announcement, it was necessary to make the information available to the markets in advance of informing the House.
	Britain's rail network has been a remarkable success story over the past 10 years. There are more passengers using our trains than at any time since the second world war—more than 1 billion last year. We have taken decisive action to remedy the failings of privatisation and put in place a stable structure for the long term. We have delivered, on time and to budget, the United Kingdom's first high-speed railway line. As I announced to the House last month, we have set up a new company, High Speed 2, which has already started work on planning the new high-speed rail services to the west midlands, the north of England and Scotland.
	To ensure that our railways remain resilient during the economic downturn and are well placed to support future economic growth, I am determined that we take the necessary steps now to invest in that critical part of Britain's infrastructure. Our priority is to deal with overcrowding and increase capacity to meet future demand. That is why we are investing more than £20 billion in enhanced rail capacity and in new and improved trains to accommodate the record passenger numbers.
	Britain's £5.8 billion first high-speed line is now open, and from December this year commuters will be able to use high-speed rail services between London and Kent. Work has already started on the £16 billion Crossrail project, which will link the Docklands, the City, the west end and Heathrow. We are upgrading the Thameslink service, bringing more frequent and longer trains to commuters on that critical route, and passengers on the west coast main line are now starting to see the benefits of an £8.8 billion upgrade that has reduced journey times and delivered more frequent services.
	I would like to inform the House today of what we are doing to invest in the next generation of long-distance trains, to make the UK a centre of excellence for European rail manufacturing. This morning, I announced to the stock exchange that a British-led consortium of John Laing, Hitachi and Barclays had been chosen as the preferred bidder for the contract to re-equip the east coast and Great Western main lines with new express trains. The high-speed trains that operate on those routes are up to 30 years old and although they have served passengers well, they now need to be replaced with more reliable, more efficient and greener trains that can carry more passengers.
	I hope that the House will allow me to make a personal observation. My father, who worked on the railways all his life, was involved in the testing of the 125 high-speed trains as they were brought into service. I am delighted to have the opportunity to announce their successors today. They will have longer coaches, allowing up to 20 per cent. more seats on each train. Faster acceleration will allow journey times between London and major centres to be cut significantly, so a train leaving London will arrive in Leeds or Bristol 10 minutes sooner, Edinburgh 12 minutes sooner and Cardiff 15 minutes sooner. Faster journey times will mean that more frequent trains can be fitted on to the network, and improved reliability will mean that passengers face less disruption to their journeys. Moreover, the new trains will be up to 17 per cent. lighter than their existing counterparts, increasing fuel efficiency. Modern braking systems will further drive down energy consumption.
	The contract, worth some £7.5 billion, is the biggest single investment in inter-city trains in a generation. It involves the construction and maintenance of up to 1,400 new vehicles. The first of those trains will enter service in 2013, and over the following years they will provide high-quality journeys to passengers between London and destinations across the UK, including Leeds, Newcastle, Edinburgh, Cambridge, Bristol, the Thames valley and south Wales. They will also be able to run on both electrified and non-electrified lines, which means that through trains will be able to run from the electrified to the non-electrified parts of the network. That is why I have announced, in parallel to the introduction of those trains, that we are developing plans for the electrification of the Great Western and midland main lines. That will allow us to deliver the widest possible range of high-quality services for passengers.
	The announcement is good news for United Kingdom jobs, as well as rail passengers. As part of the contract, the winning consortium has agreed to make significant inward investment in the UK to construct a new state-of-the-art train assembly and manufacturing facility. I expect that nearly three quarters of the value of the order will be spent in the UK, benefiting the UK economy and providing UK jobs. The exact location of the new factory remains subject to further negotiation, but the company has confirmed to me that it will be in the east midlands, Yorkshire or the north-east.
	In addition, new maintenance depots will be built in Bristol, Reading, Doncaster, Leeds and west London, with upgrades to existing depots throughout Great Britain. That means that new manufacturing jobs will be created and maintained in those regions, and that many more jobs will be safeguarded across the country in the supply chain. In all, I estimate that some 12,500 long-term jobs will be created or safeguarded as a result of today's announcement.
	As hon. Members know, Japan is one of the most advanced nations in the world in high-speed rail and new rail technology. Japanese trains have extraordinarily high levels of reliability and speed. Meanwhile, the rail industry is expanding across Europe—with countries such as France, the Netherlands, Germany and Italy investing in high-speed rail and new train fleets, and significant new opportunities in the countries of central and eastern Europe.
	By bringing together UK and Japanese technology, design and manufacturing capability, we will give the UK an even stronger bridgehead into the fast-developing European and international rail markets—just as the entrance of Toyota, Honda and Nissan into the UK did with the automotive industry. That means that the UK will continue to develop as a centre of excellence in train manufacturing, enabling the country to become a key player, as what was once a domestic rail industry becomes increasingly international.
	The Government's investment in the UK rail industry means that, in addition to the announcement, orders for a further 2,200 train carriages worth more than £2.5 billion are already confirmed or in the pipeline. Today, I can also confirm that the Department is in advanced discussions with National Express East Anglia to provide 120 new carriages to renew and expand the train fleet operating on the West Anglia route between Liverpool Street and Stansted airport. The preferred bidder for those trains is Bombardier Transportation Ltd, which plans to assemble the new carriages in Derby, safeguarding jobs there.
	A further order worth £400 million—as part of the fiscal stimulus package announced by my right hon. Friend the Chancellor of the Exchequer—will be awarded shortly. Again, Bombardier is well placed to win that. There is another £2 billion order for 1,200 carriages for Thameslink, for which a preferred bidder will be announced later in the year.
	The orders demonstrate that the Government are prepared to invest, even in difficult economic times, in improving our national infrastructure. The announcement is genuine good news—for workers that up to 12,500 jobs will be created and safeguarded; for the economy that we are putting the UK back at the forefront of international manufacturing industry; for the regions that the Government are supporting significant inward investment, and for passengers that we are taking the steps necessary to improve their rail journeys.
	I commend the statement to the House.

Theresa Villiers: We welcome the prospect of new trains for the UK's chronically overcrowded railways, but the Secretary of State needs to answer several important questions about his statement. However, first, I thank him for advance sight of it.
	On the phasing of the project, how many trains will be delivered? On what dates and to which parts of the network will they be provided? When will the full roll-out of the inter-city express programme be completed?
	The Government have been working on the project since 2004; why is it taking so long to deliver? Will the Secretary of State confirm that the 2013 phase will be testing only, so that there will be almost no benefits to the travelling public before 2015?
	How much in total has been spent on consultants during the procurement process since the end of 2007, when the total was already a startling £6.7 million? How much would have been saved if the Government had opted for a more standardised, off-the-shelf train rather than setting down the very detailed and complex specification that they chose?
	How much has been added to the cost of the programme because a decision has yet to be made on whether to electrify the Great Western line? Is the Secretary of State promising the delivery of the new trains on the Great Western line by 2015, even though the final outcome on electrification may not be determined by then? To what extent will costs consequently be driven up?
	The specification in the contract for the bids was for trains that weighed 362 tonnes, yet the Hitachi bid, which has been accepted, is for 411 tonnes. The Secretary of State claims that that is substantially compliant, but was Bombardier disadvantaged by sticking more rigorously than Hitachi to the weight specification?
	The Secretary of State says that 12,500 jobs will be created or safeguarded. Will he admit that the assembly plant to which he referred will assemble items manufactured overseas rather than being what is normally understood to be a manufacturing plant? Will he place in the Library a copy of the research that he has undertaken to substantiate his claim about 12,500 jobs? What is the split between the jobs that will be created and those that he believes will be safeguarded? Will he comment on Hitachi's press statement today, which says that the new factory will initially employ only 200 staff, with the potential to employ only 500 staff in future?
	Is the Secretary of State claiming that today's announcement will safeguard jobs at the Bombardier factory in his Derby constituency? If so, how can the news that Hitachi, not Bombardier, has won the inter-city express programme contract possibly give that guarantee? How can the announcement that Bombardier might—I emphasise "might"—get the contract for extra carriages, reannounced yet again today, for Stansted Express give that guarantee of safeguarding jobs in Derby? Is not the announcement on Stansted Express and Bombardier simply a cynical attempt to hide the bad news for the train factory in his constituency?
	The Government's excessive micro-management of our railways is now holding up the process of delivering the extra rolling stock that passengers desperately want. We could have had extra Pendolinos on the west coast main line months ago, but Department for Transport dithering has held them up. The inaptly named Thameslink 2000 is now running around 15 years later than planned. Not one, not two, but three Secretaries of State for Transport have promised us 1,300 extra carriages, some of which were reannounced today, yet only four have been delivered. The Government's complacency is unacceptable and today's announcement will do little to reassure commuters who suffer daily from today's desperately overcrowded railways.

Geoff Hoon: I was grateful for what the hon. Member for Chipping Barnet (Mrs. Villiers) described as her support for the decision, but she spoiled the effect by her subsequent observations. I have read carefully the Conservative party's proposals for the future of the rail industry. Nowhere does that interesting document refer to something that I thought the hon. Lady might mention today—Conservative party proposals to cut our transport budget by some £840 million. It might help us all to understand those proposals if the hon. Lady stated whether she intended to cut Crossrail or bus subsidies, or whether she would withdraw the concessionary fares scheme for the elderly and the disabled. An understanding of what the Conservatives intended to cut would put her proposals for railway transport into better context. The title of the Conservative document should have been "Mind the Gap"—the gap between Conservative theory and practice.

Mr. Deputy Speaker: Order. May I say to the Secretary of State that that was a somewhat irrelevant preface? I want concise answers, as far as possible, and, of course, brief questions.

Geoff Hoon: Clearly, my preparations for answering the hon. Lady's questions were longer than they should have been.
	I emphasise that the jobs are real jobs in the UK. I was interested in the hon. Lady's failure to mention a word that I thought would feature in any spokesperson's observations about a major commercial decision—"competition". Nowhere did she mention the fact that such important commercial decisions are subject to competition, or that that is exactly how the issue was resolved. Bombardier is a great train maker. It has an order book of some 2,000 carriages, which, as I have indicated, will be added to by the announcement that I have just made, and it is bidding—with some prospects of success, I anticipate—for further orders in due course. That is important to the United Kingdom's economy, as is the decision that I have announced today.
	We anticipate that something in the order of 2,500 new jobs will be created, and that would have been the case whichever consortium had been successful. The contract is for both the construction and the maintenance of carriages. That means that a significant number of jobs will be created in the maintenance sector across the United Kingdom. It also means that jobs in the supply chain—the estimate is up to 10,000 jobs—will be protected and safeguarded, as they support the manufacture. Three quarters of the value of the contract will be spent in the United Kingdom. That figure means that the great majority of the benefit will be provided for United Kingdom jobs and the United Kingdom economy.

David Blunkett: I welcome my right hon. Friend's announcement and the investment that goes with it. May I suggest to him, as he knows the midland main line very well, that the welcome announcement about the completion of its electrification be accompanied by an announcement on the relevant rolling stock that he has announced for the east coast and Great Western main lines? The Meridian trains that are now being inflicted on passengers on long-haul journeys to Sheffield are appropriate for short-term sprints, but they are noisy, they vibrate, passengers cannot use mobile phones appropriately on them and they are not suitable for long-haul inter-city work. Given that, perhaps he could encourage the possibility of expanding manufacturing, so that we get not only a high-speed rail line but the high-quality rolling stock that we deserve.

Geoff Hoon: I am grateful for my right hon. Friend's observations. I am sure that others will have heard his words and will take appropriate note. For the reasons that he mentioned, I am particularly keen to see the electrification of both the Great Western main line and the midland main line, which is something that I announced to the House quite recently. The trains that are being procured as a result of the announcement that I have just made will have advanced technology, allowing them to operate on both the electrified and the non-electrified parts of the network. That means that they will be very flexible and will be capable of operating across our network. As my right hon. Friend will be aware, from time to time train sets are moved from one line to another.

Norman Baker: The £840 million cut is one bit of transport policy not copied from the Lib Dems.
	Let me express my disappointment that the statement was announced to the markets first. If the markets had to be told separately, they could have been told simultaneously. I resent the fact that, yet again, this House has learnt about such matters after the general public. We on the Liberal Democrat Benches welcome any new investment in railways, particularly in rolling stock and jobs. However, the Secretary of State will understand that there is some scepticism about his announcement, given the fact that of the 1,300 new vehicles announced in July 2007, and reannounced at regular intervals since, only 423 have so far been ordered, according to a parliamentary answer that I received only this week.
	Will he also accept that the fact that we have such a desperate shortage of rolling stock—there is none spare anywhere in the country—is not a good reflection on 12 years of this Government? Is that dramatic shortage not a consequence of the Treasury-driven franchise arrangements, which until recently encouraged train operating companies to reduce the number of their carriages? In effect, what we have heard today is a U-turn.
	Does the Secretary of State accept that the industry is dubious about the bi-modal train—jointly a diesel and electric train—that he appears to have settled on? The industry believes that it will push up costs and add weight unnecessarily to the vehicle, and that more flexibility would be provided if a locomotive were simply added at the point in the network where the electricity supply runs out and diesel traction is required. Is it not the case that, as a consequence, the vehicle that the Secretary of State is ordering is much more expensive than need be?
	When will we have longer platforms in place to accommodate the new rolling stock that the Secretary of State has announced today? Can he also give details of the timings for the electrification of the midland main line and the Great Western railway? Lastly, to repeat the question that was asked but not answered a moment ago, when will all 1,400 trains—or, as the statement says rather carefully, "up to 1,400" new carriages—be in service?

Geoff Hoon: Normally, the hon. Gentleman urges, encourages and exhorts me to spend more on railways, but I come to the House today with a £7.5 billion announcement on railways and I fail to detect a welcome from him or any sign that he thinks that this is a good thing. However, in the light of his previous observations, I will take it as read that he does think it a good thing. Today's announcement is important for the rail network, for passengers and for the rail industry in the United Kingdom.
	I am sorry that the hon. Gentleman made the observation about not informing the House. I followed a well established practice in the House of ensuring that sensitive decisions were communicated to the markets at their opening this morning. That is not an unusual practice when commercially sensitive issues are decided on. It is right that we should not affect the markets by, for example, coming to the House in the middle of the day when the stock market has been open for many hours. I know that the Liberal Democrats do not worry unduly about matters such as the commercial implications of these decisions. Nevertheless, they are matters to which responsible Governments have to have some regard.
	I am not going to get into a debate with the hon. Gentleman about the advantages of bi-modal vehicles, although I could. One of the clear benefits is that, in order to operate electrically powered trains, not every part of the network—that includes, for example, maintenance depots—has to be electrically powered. His suggestion of fitting a diesel engine to the front has been done in the past. However, it slows things down and is rather wasteful—I would have thought that he would be concerned about the impact that such decisions have on the environment—and does not serve the purpose of a modern, 21st-century rail network.

Eric Martlew: I ask my right hon. Friend to ignore the hon. Member for Chipping Barnet (Mrs. Villiers)l; I would remind him that the Tories cancelled the high-speed train for the west coast main line. I am pleased that John Laing, which started as a small building company in my constituency, is playing a major part in the project. However, the reality is that we get new trains from various suppliers, yet in this country we still do not have an adequate test track. If we are not careful and if we do not get that test track, we will build the trains but send them to Germany to be tested. Will my right hon. Friend look at that?

Geoff Hoon: My hon. Friend makes an extremely good point about testing. Providing space on the network for the kind of high-speed running that is required to test new vehicles is an issue when our existing network is so busy, so I will certainly look at his suggestion.

Patrick McLoughlin: In agreeing with what the right hon. Member for Sheffield, Brightside (Mr. Blunkett) said about the Meridian trains on the east midlands line, when does the Secretary of State anticipate that the new trains will be available for that line, or is it a line that he just wishes to ignore?

Geoff Hoon: As someone who travels up and down that line very regularly—even more often than the right hon. Gentleman, I expect—I do not think that anyone could accuse me of ignoring it. Although I have promised the House that I will always mention electrification of the great western line before the midland main line, I am nevertheless committed to the electrification of both. Therefore, I think that we will see significant changes on the midland main line in years to come.

David Taylor: Further to the point that my hon. Friend the Member for Carlisle (Mr. Martlew) made, the Secretary of State's father probably tested the 125s on the test track in north Leicestershire. Can my right hon. Friend confirm that the east midlands location referred to in the statement is even more specific, in that it would be in North-West Leicestershire, close to the town of Ashby de la Zouch, where there is a well developed supply chain and a long tradition of high engineering skills, which spin off into Toyota, Rolls Royce, Bombardier, Brush in Loughborough and elsewhere? What influence will the Government have on the eventual decision and is it a commercial one only? Finally, will my right hon. Friend see me about the planning implications of the location of any manufacturing plant in or near Ashby, which, as things stand, is currently crowded in by all sorts of planning pressures?

Geoff Hoon: I well understand why my hon. Friend would want to speak up on behalf of the benefits of such a major investment going to his constituency, and I would certainly be willing to meet him to discuss the proposals, although not to discuss any specific planning matters that are not part of my responsibility. I assure him that this will be a commercial negotiation conducted by the company. No doubt he will want to make representations to the relevant local authorities and, indeed, to the company itself.

Edward Timpson: The Minister will be aware from recent discussions that we have had, and from his recent visit to Crewe, that Bombardier is one of the largest employers in Crewe and that it continues to overhaul trains in this very difficult climate. Today's announcement will be a huge disappointment to many of the workers at Bombardier, who, as recently as November last year, saw 45 of their fellow workers being laid off. In relation to the 120 trains, for which Bombardier is the preferred bidder, is it correct that up to 70 of them might be built in Japan? The Secretary of State said that another contract, for which Bombardier is tendering, will be announced shortly. When will that announcement be made? The biggest problem for Bombardier is the peaks and troughs between contracts, which mean that it cannot sustain a high-level, long-term, experienced work force at a time when those people so desperately need the work.

Geoff Hoon: The hon. Gentleman is right to speak up for the interests of his constituents. As the child of a railway family, I probably spent more time than I care to remember sitting on Crewe station. Anyone who has travelled regularly on our railways will appreciate the splendours of that particular place. It is vital that we recognise that the announcement that I have made today will protect and safeguard jobs in the railway industry right across the United Kingdom, including, I believe, at Bombardier. Necessarily, a great railway company such as Bombardier will have wanted to win this particular contract. There has been a detailed, thorough and competitive commercial contest to determine how the orders should be set out.
	Incidentally, I do not recognise the hon. Gentleman's point about the prospect of some 70 trains being built in Japan, but I will certainly look at that. I do not see why Bombardier would provide that order to Japan. It is important to recognise that there is now a significant programme of orders in railways stretching forward, and that Bombardier is very well placed to win some of those orders.

Dan Norris: This is a very welcome piece of news, and I am very appreciative. I know that all those who have access to the Great Western line stations will be very pleased indeed. They will not care who heard what when; they will just be pleased to hear this news. The improvements in reliability will be important to those who regularly use the railways in my region, as will the reductions in the duration of their journeys. May I, speaking as a geek—a railway person who, rather like my right hon. Friend, sat on railway stations as a schoolboy, in places such as Keynsham and Bristol Temple Meads—ask him whether the top speed on the Great Western network will be increased above the 125 mph limit that it has had for a long time?

Geoff Hoon: I am grateful to my hon. Friend for his observations. These are exciting times for the Great Western line and, indeed, for passengers all down the line. We have announced a programme for electrification, and today's announcement will provide for higher speed trains perhaps even going beyond the extent of electrification. The bi-modal nature of the trains—if I may out-geek my hon. Friend for a second—means that they will be able to go beyond the electrified part of the line and therefore provide excellent services well beyond the limits of electrification. I do not anticipate the maximum speed needing to be exceeded at present. As a result of the new trains' lightness of construction, they will accelerate more quickly, which will reduce the time intervals between station stops. That will result in a significant improvement for passengers.

Mark Prisk: Having campaigned for them, I welcome the confirmation of the 120 new carriages on the West Anglia route. May I press the Secretary of State on two important delivery details? First, on rolling stock, when will the new carriages enter service? Secondly, a year ago—or possibly more—we were promised longer platforms and more track on that vital route. There have been a lot of delays and uncertainties about that. Will the Secretary of State confirm that the Government still hold that commitment, and tell us when the work will begin on the track?

Geoff Hoon: I have made it quite clear that capacity constraint is an important part of the work that we need to do to improve our rail network, and there are some significant steps that can be taken. Today's announcement on inter-city trains, which will have greater carriage capacity, will be part of that, as will the continuing work to lengthen platforms. The negotiations between the manufacturer and Anglia will proceed in relation to Stansted, and I anticipate that the carriages will be in service by 2011-12.

Ann Cryer: I thank my right hon. Friend for his statement, which is very welcome. May I just check that a single train travelling from, say, London King's Cross to, say, Skipton will be able to change from electric to diesel power in that one journey? The reason why I ask is that the part of the Airedale line that runs from the constituency of the hon. Member for Shipley (Philip Davies) through Keighley and up to Skipton was electrified under the previous Conservative Government but, unfortunately, the cabling is such that if a 225—an electrified high-speed train—goes on to it, it drains the power from the whole line so that nothing else can use it. Up to now, therefore, trains going from King's Cross to Skipton have to be diesel-powered 125s. A lot of my constituents will be pleased to hear that the one train that travels each way between Keighley and King's Cross can be a fully modernised train that is much more comfortable than the 125s that we are using at the moment.

Geoff Hoon: My hon. Friend is probably beginning to exhaust the limits of my technical competence in the details of electrification. I know that there are various kinds of electrification, but as I do not know the arrangements in and around her constituency, I will not tempt fate by either agreeing or disagreeing with her. I will, however, ensure that she is written to and that an explanation is provided.

Susan Kramer: Platform 20 at Waterloo is now available for domestic services, but I understand that the trains needed to run those services have not yet been ordered, even though the need for them was recognised two years ago. Will the Secretary of State confirm that the production lines for the class 450 Desiros have now, sadly, been closed, and that new orders cannot be delivered before 2011? Will he also confirm that the cost of those trains will now be 30 per cent. higher because of the collapse of the pound against the euro? And will he tell us whether we are going to get those trains at all?

Geoff Hoon: I have consistently made it clear since getting this job that relieving congestion and improving capacity on our network is of paramount importance. Bringing into service the platform at Waterloo is part of that process, and the investment that I announced today is part of a much wider £20 billion investment in new rail capacity.

David Anderson: I welcome this news, which stands in stark contrast to the do nothing attitude of the Conservative party. May I point out to the Secretary of State, however, that high speed does not necessarily mean high quality? In the past year or two, the east coast line has seen job cuts resulting in reduced services for the people on board, so can we please be clear that, while high speed is good, other things also need to be put in place? Will he also have a word with National Express, which needs to get its act together?

Geoff Hoon: Certainly, my emphasis has not been on speed itself, as I made clear in response to an earlier question. This is not simply about increasing the maximum speed; it is about improving reliability and efficiency and, crucially, about improving the experience of passengers in higher-quality vehicles. I therefore agree with, and welcome, my hon. Friend's observation.

Roger Gale: In his statement, the Secretary of State said that from December this year, commuters will be able to use high-speed rail services between London and Kent. That, of course, is literally correct, but high-speed locomotives are of little value if their progress is impeded by poor track, out-of-date signalling, bad bridges and level crossings. When may we expect that the line between Canterbury and Manston airport will be upgraded in every respect, so that we can take advantage of the possibilities for Manston to play its part in aviation in the south-east and so that commuters from east Kent can travel to London at something like the speed at which they used to be able to travel in 1927?

Geoff Hoon: Well, I cannot remember what it was like in 1927, but I can remember what it was like under the previous Conservative Government. As someone who has always been a strong and consistent supporter of investment in the railways—I am delighted that I have the opportunity today not only to talk about it, but to provide it—I am determined to ensure that we improve the quality of our railways right across the country, including in Kent. The hon. Gentleman has been in the House rather longer than I have; I only hope that I can find an example of his referring to the appalling way in which railways were treated by the past Conservative Government.

Meg Munn: My right hon. Friend will know that the city of Sheffield has a long history of manufacturing and that many of its people have skills in engineering. I understand that he cannot say anything more about the location of the manufacturing and assembly plant, but Sheffield would indeed be an excellent area in which to place it. Is he able to say a little more about the types of job that will be available and particularly whether there will be opportunities for younger people to get training, as in these difficult economic times opportunities for apprentices and others to come into industry are enormously important?

Geoff Hoon: Knowing the excellence of manufacturing experience in the city of Sheffield, I made it clear that it is one of the places being looked at very closely by the consortium for the location of a manufacturing plant. It will be keen to take advantage of the significant skills available in the Sheffield area, not least because the plant will be designed to bring advanced railway technology into the United Kingdom, just as, as I mentioned in my statement, Japanese car companies brought advanced manufacturing production techniques for the automotive industry into the UK. That is very much the model that we want to see for our railways.

Anne McIntosh: May I help the Secretary of State for Transport? On Radio 4's "Today" programme, it was announced that hybrid trains—diesel and electric—will be operated, so will he confirm that they will be available on the east coast route? How many will there be in proportion to pure electric and diesel trains? Will he respond to another of my concerns? I understand that Pendolino trains are the safest in existence because the carriages are so heavy; they withstood the rail disaster on the west coast route. The trains that he has announced today are to be 17 per cent. lighter. Will he reassure the travelling public that they will meet the highest safety criteria? Will he pledge to remove the bottleneck north of Newcastle so that even more freight and passenger trains can travel on the east coast main line route?

Geoff Hoon: I am always grateful for help from the hon. Lady, who has always been an enthusiastic supporter of the European Union and has argued that case from her days as a Member of the European Parliament. She seems to have been rather quieter on the subject of Europe in recent times— [Interruption.] The relevance of Europe comes from the importance of having rail manufacturing facilities in the UK that can successfully compete right across the European Union—a policy that might be in jeopardy if her party's policy on the European Union were ever to prevail.
	What is important to safety, without getting into too much technical detail, is not so much the weight of the train but its construction. The hon. Lady is right that the way Pendolino trains are constructed means that passengers enjoy much greater protection, as we have seen in one or two recent incidents. In the Grayrigg accident, for example, the construction of the Pendolino train almost certainly provided protection to passengers. We want that same level of safety and security available to all passengers on all our trains.

Mark Lazarowicz: Many of my constituents who, like myself, are regular users of the east coast main line will warmly welcome today's announcement. Will my right hon. Friend do what he can to ensure that those responsible for setting the timetables of the new services take full advantage of the opportunity for faster journey times? He will know that trains from Edinburgh to London are capable of journeys much quicker than they are timetabled for. The new trains provide an opportunity, perhaps with minor track improvements, to reduce journey times to under three and three quarter hours. I am sure that the same is true elsewhere. Therefore, it would be a tragedy if we did not make full use of the faster trains to provide shorter journey times. Will my right hon. Friend guarantee that that is done by the operators when the new trains come into operation?

Geoff Hoon: I am most grateful for my hon. Friend's observations. Clearly, the train operating companies, which are ultimately responsible for paying for the trains, will want to use them to the maximum advantage. That will not only mean shorter journey times, but should allow more frequent services to destinations such as Edinburgh and others along that route.

David Howarth: For those of us who are daily commuters by train, any announcement of new investment in the railways is very welcome. However, the lack of capacity in the British train manufacturing industry and the lack of rolling stock are problems right now. Will what the Secretary of State has announced bring to an end the constant delays in securing new rolling stock, which have prevented important improvements in services throughout the whole country, and especially on the absurdly overcrowded trains that I use every day between Cambridge and King's Cross?

Geoff Hoon: That was the whole point of the announcement, which provides not only more rolling stock on the network but the means of constructing it, by providing for the United Kingdom extra train-making capability.

Brian Binley: I welcome the general thrust of the Secretary of State's statement and take the opportunity to thank him for meeting the hon. Member for Northampton, North (Ms Keeble) and myself to discuss these matters two weeks ago. He was very kind and helpful. May I ask how this statement might impact on the services provided for long-suffering commuters from Northampton? Will he give us some specific help in that respect, because I know that my constituents would welcome a light at the end of the railway tunnel?

Geoff Hoon: I return the compliment. I found the conversation about services to Northampton very interesting and I rather think that I gave a promise to visit and see the services there. Investing, not in the particular Northampton line, but in other lines across the country, will clearly have knock-on effects for capacity in the UK. We need more investment in railways; I accept the observations that have been made. That is why the Government are committed to spending £20 billion to improve capacity, which will benefit people in Northampton as it will those in other parts of the country.

Charles Walker: I share a line with my hon. Friend the Member for Hertford and Stortford (Mr. Prisk), and in the morning it is hell in Broxbourne, beyond hell in Cheshunt and simply miserable for commuters from Edmonton and Enfield into London. I am delighted that there is to be new rolling stock. May I ask the Secretary of State whether I could meet his officials or one of his junior Ministers for a gentle discussion about timings?

Geoff Hoon: I regard it as the responsibility of any Minister to meet right hon. and hon. Members to discuss their issues of concern. I do not recall ever having turned down a meeting, and I will ensure that one is arranged for the hon. Gentleman.

John Pugh: The Transport Committee strategy report states:
	"We note how little new rolling stock is going to be available to areas outside London and the south-east".
	What is being done about the old, unsafe 142s that shunt between Southport and Manchester on the Northern rail franchise, which are acknowledged to be the very oldest on the entire network?

Geoff Hoon: There is a constant programme of upgrading our rolling stock. I would not accept for a moment, however, that any of that rolling stock is unsafe.

Philip Davies: Faster trains between London and Leeds are clearly welcome, but the biggest problem experienced by my constituents is getting to and from Leeds on horribly overcrowded trains on the Airedale and Wharfedale lines. Can the Secretary of State tell me when extra carriages will be available on those two lines in particular, and also, crucially, how much money will be allocated to providing the longer platforms that will be required to take them?

Geoff Hoon: I note that making an announcement about capacity on a particular line has laid me open to a general discussion abut capacity on all our lines. I repeat that I recognise that there are capacity issues to be addressed. We have a very significant programme of investment in capacity, along with a programme to establish where new lines will be required to relieve those capacity problems. That is something to which the Government are committed. I have to say that those on the hon. Gentleman's Front Bench are not committed to spending the same amount on transport infrastructure as we are spending.

Edward Davey: Will the Secretary of State ask his officials to look again at the delays in reaching a decision on new train services for platform 20 at Waterloo? As was pointed out by my hon. Friend the Member for Richmond Park (Susan Kramer), the platform is ready for domestic commuter trains, but there could be a delay of over a year before it is actually used.
	Will the Secretary of State also write to me and let me know whether his Department has finally confirmed with South West Trains and Network Rail the investment for the new 10-car commuter trains, including investment in all the related platform-lengthening and infrastructure works that are essential to reducing the chronic overcrowding that is being suffered every day by commuters to Waterloo?

Geoff Hoon: I should be delighted to send the hon. Gentleman a letter about that. I shall also send a copy to his hon. Friend the Member for Richmond Park (Susan Kramer).

Social Security

Rosie Winterton: I beg to move,
	That the draft Social Security Benefits Up-rating Order 2009, which was laid before this House on 28 January, be approved.

Mr. Deputy Speaker: With this we shall take the following motion, on pensions:
	That the draft Guaranteed Minimum Pensions Increase Order 2009, which was laid before this House on 28 January, be approved.

Rosie Winterton: I am satisfied that the orders are compatible with the European convention on human rights.
	This year's social security benefits uprating order increases support for people on pensions and benefits by more than £6 billion. It reinforces our commitment to providing real help in the current economic climate, taking total benefit expenditure for the next financial year to an estimated £142 billion. We are committed to doing everything we can to get real help to people, taking action now when it matters most.
	The headline figures are generous, and I hope that they will be welcomed throughout the House. Pension credit will rise by the highest amount since its introduction, targeting the most vulnerable, and we will increase the basic state pension by 5 per cent. in April. That means more cash in pensioners' pockets, and it comes at an important time for them. The order will add some £6.2 billion to Government expenditure, of which almost £4 billion will support pensioners, £1.2 billion will help working-age people, £890 million will go to disabled people and carers and £70 million will go to children.

Nigel Evans: How much of the money will go to pensioners automatically, and how much will they have to claim? I ask because, as the Minister will know, a number of elderly people are not aware of all the benefits that are available to them, with the result that a substantial amount that could benefit them is not claimed.

Rosie Winterton: The hon. Gentleman is right. We need to ensure that pension credit is claimed by those who are entitled to it. Later in my speech I shall say more about the type of assistance that we are trying to give people to ensure that they claim.
	The order will increase most national insurance benefits in line with the retail prices index. As we have done in earlier years, we will base the uprating exercise on data produced in September, when the retail prices index stood at 5 per cent. I should emphasise that the September RPI of 5 per cent. was the peak of last year, higher than earnings.
	Let me explain what this means for British pensioners. The basic state pension will increase by £4.55 to £95.25 a week, while the standard rate for couples will rise by £7.25 to £152.30. That is the biggest increase since 2001.

Oliver Heald: There has been considerable concern about the true rate of inflation for pensioners. Obviously the Minister is using a recognised measure—the RPI—but the Rossi index, surprisingly, was much higher than the RPI this year because of rises in food and heating costs. Is the Minister satisfied that 5 per cent. is a true reflection of the price rises that pensioners are facing and have faced over the last year?

Rosie Winterton: It is true that there have been extra pressures, especially this year. I am about to describe some of the other measures that we have taken—particularly in regard to the winter fuel allowance—to reflect some of those increased pressures, while, as the hon. Gentleman says, sticking to the formula. That, as I am sure he knows, is the way in which a number of Administrations have worked.
	As I have said, from April 2009 pensioners on the lowest incomes will see the biggest increase in the pension credit standard minimum guarantee since its introduction in 2003. It will rise by £5.95 a week for single pensioners and by £9.10 a week for couples, which means that no single pensioner need live on less than £130 a week, and no couple on less than £198.45 a week. That underlines our determination to target help on the people who need it most—those with the lowest incomes. This year we will spend more than £13 billion more on pensioners than we would be spending if we had retained the policies we inherited from the last Government. As a result of those tax and benefit changes, the average pensioner household is £1,600 a year, or £31 a week, better off, while the poorest pensioner households are, on average, around £2,200 a year better off.
	As the hon. Member for Ribble Valley (Mr. Evans) pointed out, it is vital for us to do all that we can to ensure that benefit recipients and pensioners receive the support to which they are entitled. That is why we have tried to simplify the claims process, removing the need for people to complete and sign claim forms: claims for housing benefit, council tax benefit and pension credit can now be made together by means of a single telephone call.
	We are considering a number of other ways we can ensure that people receive their entitlement, such as the use of data matching to identify those who may be entitled to pension credit but do not currently receive it, provision for around 13,000 home visits a week by the local pensions service to vulnerable customers, and the promotion of take-up through a range of activities including direct mail initiatives, local partnership work, and regional radio, press and outdoor advertising. We also intend to support Members of Parliament who run their own campaigns locally. Those campaigns in themselves can be quite successful.

Nigel Evans: Today the  Lancashire Telegraph, a newspaper that covers my constituency and several others in east Lancashire, is launching its own campaign on behalf of the elderly and pensioners to raise the profile of all the issues that cause problems to them. The Minister will be concerned to learn that over the past six weeks, during the very cold spell that we have experienced, there has been an enormous increase in the percentage of elderly people who have died as a result of, for instance, respiratory problems and lack of heating. What more does she think could be done, particularly during the current bad weather, to ensure that no pensioner will have to make the choice between food and turning the fire on?

Rosie Winterton: One of the key measures that we have taken this year is the tripling of cold weather payments from £8.25 to £25 a week. That has meant that whereas last year we paid out about £4 million in cold weather payments, this year we have already paid out about £166 million. We are trying to ensure that extra help is provided. I shall discuss some of the other changes that we have made to ensure that real action is taken now.

John Barrett: The Minister mentioned that a lot of pensioners are able to access information about benefits by telephone. One of the issues raised in the equivalent debate last year was the poor quality of service given by a number of call centres. Is she convinced that things have moved on and that when people phone up for help they get the support and advice they need?

Rosie Winterton: When I visited one of the headquarters of the Pension, Disability and Carers Service—perhaps the hon. Gentleman should pay it a visit, if he has not already done so—I was certainly very impressed with the way pensioners were dealt with carefully: people tried to take their details and talk them through their eligibility. I constantly keep in touch with the directors of the service and so on, not only to ensure that the service provision targets are being met, but to examine all the time what else can be done to improve the system. It is vital that we examine different methods—for example, working with organisations such as Age Concern or Help the Aged, and, in particular, with local centres that older people—perhaps those on lower incomes—might frequent, so that we get the services and the information to these people, with a particular emphasis on the fact that these are entitlements. We must encourage them to take up their entitlements.

Andrew Selous: Before we move off the issue of call centres, may I point out that some of the most vulnerable people who will be affected by the benefits uprated in this order have to approach the social fund, and its telephone service is a lot worse than that in other parts of the Department? Will the Minister look into that with her colleagues, and ask the relevant Minister to write to me on that specific point?

Rosie Winterton: Yes, of course. If the hon. Gentleman has particular examples, I would be more than happy to pass them on to ministerial colleagues.
	I wish to touch on the points that have been raised about the extra help that we have provided this year. We have, for example, increased the winter fuel payments by £50 for households with someone aged between 60 and 79, and by £100 for households with someone aged 80 and over. That means that the total direct help with fuel costs this year for pensioners aged between 60 and 79 will be £250—the figure will be £400 for those aged 80 or over. My right hon. Friend the Chancellor also announced, in the pre-Budget report, a one-off increase of £60 to the annual £10 Christmas bonus. That is additional direct financial support that will benefit not just pensioners, but all 15 million people who receive the Christmas bonus, including those on disability and bereavement benefits.

Oliver Heald: One of the slightly disappointing things about the Minister's announcement is that the cut in savings credit, which was supposed to come in when the basic state pension was increased by earnings, is being implemented early—this year. She will recall the national insurance contributions change where the upper accrual point was introduced. Again, that was supposed to happen because the basic state pension was being uprated by earnings, but it was brought in early—last year. Is it not time that she did what her old friends in the TUC suggest and introduced the uprating by earnings or prices, whichever is the higher now?

Rosie Winterton: Of course if we had introduced the increase by earnings this year, it would been lower than the change that we are making by using the RPI. We have said that we will restore the link with earnings, either by 2012 or before the end of the next Parliament. That is our commitment—the Conservative party abolished the earnings link and we have said that we will restore it. As I said, this Government are spending about £13 billion more on our pensioners in general.
	This morning, I tabled a statement—I did inform both the Opposition Front Benchers about it—explaining two supplementary issues concerning payments of invalidity allowances to pensioners from April 2009. In December, we announced new rates of invalidity allowance for customers under pensionable age to support the alignment of the rates of incapacity benefit and employment and support allowance. The rates for eligible pensioners due to receive invalidity allowance will be increased in line with the RPI in the usual way. The Department subsequently wrote to pensioners eligible for an invalidity allowance informing them of their entitlements, however, because of a technical error a number of incorrect entitlement notices were sent. That means that about 45,000 people may be overpaid and about 25,000 may be underpaid, depending on their individual circumstances. Weekly overpayments will range from a minimum of 5p to a maximum of £3, and the maximum underpayment will be £1.80 a week. Any arrears will be paid to customers, and we will not take any action to seek recovery of the overpayments.
	As the Department works through the affected areas, we will write to all customers who are affected to explain their position. As people become pensioners from April 2009, they should automatically move on to the higher rate of invalidity allowance. Because the uprating order for this year does not provide the statutory basis ordinarily needed to make these higher payments, we shall be making them on an extra-statutory basis in the coming tax year—about 7,000 customers are affected, and the payments involved total about £350,000. Obviously, I am sorry that this unfortunate situation has occurred, but the issue is a technical one and we will put it right.

John Barrett: I wish to put on record the fact that I appreciated having early sight of the Minister's statement and that the Liberal Democrats welcome her decision not to reclaim these amounts, even where the sums are relatively small. We appreciate that, and we know that many constituents up and down the country will too.

Rosie Winterton: I thank the hon. Gentleman for his support. I should emphasise that customers will not need to take any action themselves; the Pension, Disability and Carers Service will identify and correct cases as soon as possible, and will contact all those concerned.
	On working-age benefits, we will increase most income-related benefits by the Rossi index, which is the RPI excluding rent, mortgage interest, council tax and depreciation. Most working-age income-related benefits will increase in line with the September Rossi index of 6.3 per cent. That means that the personal allowance for a single person over the age of 25 will increase from £60.50 a week to £64.30—for a couple the increase will be from £94.95 to £100.95. Incapacity benefit and employment and support allowance will both be increased using the Rossi index so that, over time, all customers in similar circumstances will receive the same level of support.

Joan Humble: Can the Minister say a word about the carer's allowance? Most people who receive it are of working age, and a recent report by the Select Committee on Work and Pensions recommended that the Government should look to synchronise the increase in the carer's allowance with the increase in the minimum wage. It did so because too many carers who are working receive an increase in the minimum wage in the autumn that then disqualifies them from the carer's allowance, and they have to wait until the April uprating before they can be eligible again. Will she examine that particular issue?

Rosie Winterton: Yes, I will certainly look at the points that my hon. Friend has made. I know that she cares passionately about this issue and I can reassure her that we value the work that carers do. In the national carers strategy, we have outlined our vision that by 2018 carers will be universally recognised and valued as being fundamental to strong families and stable communities. Within that, we will of course constantly bear in mind the support that carers receive through the benefits system. We have amended our proposal so that we will not move carers from income support until we have a clear and detailed plan setting out reform of the benefits system over the long term to take account of the needs of carers.

Andrew Selous: I commend the hon. Member for Blackpool, North and Fleetwood (Mrs. Humble), who is an assiduous member of the Work and Pensions Committee, for raising that point. I would say gently to the Minister that this issue has been around for a few years now, and perhaps she could go back to the Department with a sense of urgency about getting it sorted, because it does cause worry for many people.

Rosie Winterton: I will certainly take that point back to the Department.
	In the July 2008 welfare reform Green Paper, we proposed that incapacity benefit customers with an age addition would have their benefit frozen until the rates were aligned with contributory employment and support allowance. However, following consultation, my right hon. Friend the Minister for Employment and Welfare Reform announced in December that incapacity benefit customers with an age addition would see their overall benefit increase by at least half of Rossi—3.15 per cent. That means that they will not receive less than £95.15 a week, which is the same amount of incapacity benefit as someone in the support group getting contributory employment and support allowance.
	The cost of uprating benefits from April 2009 is nearly £6.2 billion, with almost two thirds going to pensioners. We are not taking a do nothing approach: we recognise that it is absolutely right to protect the most vulnerable in society, particularly during times of economic hardship. The cost of doing nothing would be enormous, and we are better positioned to help people during the recession than previous Governments were. On top of our active efforts to increase benefit take-up, the money that I have announced today represents real help and action now when it matters most. I commend these orders to the House.

Andrew Selous: The Conservatives support the uprating of benefits and pensions because we believe that anything that will help hard-pressed individuals and families at this incredibly difficult time for the United Kingdom is welcome. In these orders, the guaranteed minimum pension increases by 3 per cent.; incapacity benefit claimants with age additions receive an increase of 3.15 per cent.; the standard minimum guarantee element of pension credit increases by 4.8 per cent.; the basic state pension, carer's allowance, attendance allowance, disability living allowance, industrial injuries benefit, incapacity benefit and child benefit increase by 5 per cent.—by the increase in the RPI; and income-related benefits, including income support, jobseeker's allowance, employment and support allowance, housing benefit and council tax benefit increase by 6.3 per cent. or by the Rossi index which is unusually, as the Minister has already told us, more than the RPI this year because housing costs have fallen. While most tax credits will increase by 5 per cent., the child element of the child tax credit is rising by 7 per cent.
	So we have six different percentage increases applied to more than 14 pages of different benefits, which is why I shall mention the issue of benefit complexity later. I suspect that it is the complexity of the subject that has meant that, in my recent experience, fewer and fewer Members attend this debate every year. If it is difficult for hon. Members who are meant to understand such things, how much more difficult must it be for our constituents, with their busy lives?
	We have already had some discussion about the rate of inflation for pensioners. They will no doubt be very pleased to get more than the 75p increase that they got from this Government a few years ago. However, is it appropriate to use the RPI to uprate pensions—a point made quite properly by my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) a moment ago? I wonder whether he is aware that Capital Economics, a forecasting house, has calculated that the pensioners' inflation rate to December last year was actually 12.2 per cent. The question we really need to ask is how the indices are calculated and whether they are fit for purpose.

John Barrett: Does the hon. Gentleman agree that we are entering a unique situation in the year ahead? It is possible that we will have negative inflation during this recession, so pensioners' inflation might rise at the same time as the indices used to calculate the uprating of benefits actually fall.

Andrew Selous: The hon. Gentleman makes a valid point, and we will have to keep the issue under review, especially as far as pensioners are concerned, in the extraordinary circumstances into which we are heading.
	Depending on the benefit, either the RPI or the Rossi index is used. Before we decide on the merit of the order, it is worth trying to understand which inflation measure is applied to each benefit and why. It is important to debate those issues because they open up important questions about whether different groups in our society suffer from different inflationary pressures. The benefits that people will access as a result of the order being made today will differ depending on the inflation measure that is applied to the benefit. The question that we have to ask when considering the merits of the order is whether the uprating will cover the increased cost of living to which the particular group drawing that benefit is subject. The RPI is applied to uprate contribution-based jobseeker's allowance, child benefit, incapacity benefit, carer's allowance and disability living allowance. Those are the main benefits to which it applies. The RPI is calculated by the Office for National Statistics each month by collecting some 110,000 prices of about 650 goods and services in about 150 locations, including on the internet. These goods include the obvious ones—bread, cereal, furniture and clothing, as well as water, gas and electricity. With that information, the ONS uses data from the Department's family expenditure survey and other detailed expenditure analyses put together by market research companies and trade reports, and arrives at a representative shopping basket. The changes in prices of the goods in the basket are used to produce a headline figure that is intended to be broadly representative of the cost of living.
	With reference to the RPI, which is the subject of the order, it is worth pointing out that the patterns of pensioner expenditure are not explicitly factored into the representative shopping basket. The ONS explains that that pattern of demand is probably atypical and would distort the average. Pensioner households, which on average derive about three quarters of their income from the state one way or another, are having some of their benefits uprated by the order according to an inflation index that does not explicitly acknowledge or comprehend how they spend their money. That is an important point that we need to bear in mind.

Nigel Evans: If elderly people have got into financial difficulties, they may have borrowed money either on credit cards, for which the rate of interest bears no relationship to current bank rates, or they may even have been induced to borrow from loan sharks, who can charge obscene rates of interest. A constituent came to see me last week about the financial difficulties that he had fallen into, mainly because of the loans that he had taken out.

Andrew Selous: I am very glad that my hon. Friend has raised that point. He is right to do so: those on very low incomes, such as pensioners and others, are extremely vulnerable to unscrupulous people charging very high rates of interest. Indeed, that was why the former shadow Secretary of State was right to raise concerns that people on benefits were going to be charged rates of up to 27 per cent. in the White Paper brought forward by the Department. However, the broader important point has to do with the lack of availability of affordable credit for very large numbers of constituents around the country. We need to be a lot more innovative about involving credit unions and perhaps many other players who are not in the field to meet what is a very real need. This is a serious point, and my hon. Friend is right to raise it.
	The Rossi index is the other main index used to uprate the different allowances and benefits—jobseeker's allowance, council tax benefit, housing benefit and income support—covered by the order. It is compiled in the same way as the retail prices index, except that it excludes rent, mortgages, interest payments and housing depreciation costs. It is higher than the RPI this year because housing costs were falling over the year to September to 2008. It is also important to remember that the Rossi index is different from the consumer price index which, confusingly, is the main inflation index used by the Government and the Bank of England.
	Later in my remarks, I shall refer to the Government Actuary's report accompanying the two orders before us. It looks at the orders' effect on the national insurance fund that is used to pay out benefits and pensions for which national insurance contributions are a necessary qualifying condition. They include state retirement pension, contributory jobseeker's allowance and contributory employment and support allowance.
	There are concerns about the assumptions being used by the Government Actuary and the Chancellor in the pre-Budget report, and the use to which the fund may be put. That is an important subject, and I shall deal with it later in my remarks.
	The benefits and pensions that are uprated by these orders are vital elements in combating child, adult and pensioner poverty, but by no means are they the whole solution. We want to help the workless get back into work, where appropriate, and we want to find the best possible ways of enabling people to avoid poverty, including poverty later in life. We recognise the strong connection between worklessness and children growing up in poverty, and that it leads to fewer life chances for those children.
	As for the effect of the order on the child-related benefits, we support the Government's aim to end child poverty by 2020, and we will support them if they produce sensible legislation to make that target binding. On its own, however, uprating the benefits in this order will not be enough, as the Department's figures show that the number of children in poverty has risen by 100,000 for the second year in a row. On current progress, the Government will miss by 500,000 children their target of halving child poverty by 2010. We believe that a broader approach is needed, one that does not just involved the benefits uprated by the order. They are vital, of course, but there needs to be serious engagement with schools, family life, local authorities and registered social landlords.
	I turn now to the working-age benefits, which of course are of immense significance after yesterday's greatly increased unemployment figures. In December, 1.97 million people were declared unemployed, a total that was 146,000 up from the three months to September 2008. Not all of them are entitled to claim the benefits uprated in the order, and not all of those entitled to claim choose to do so.
	The order increases jobseeker's allowance for those under 25 to £50.95 a week. That is relevant, as unemployment among 18 to 24-year-olds sadly increased by 38,000 in the three months to December to 616,000.

Lindsay Hoyle: The hon. Gentleman is making some very important points. We all recognise that, in general at least, unemployment is rising in everyone's constituency. Does he agree that we should reformulate the statutory redundancy pay to assist those being made redundant? It is a long time since it was looked at, and does he agree that we should consider introducing annual uplifts?

Andrew Selous: I am very grateful that the hon. Gentleman has raised that issue, and I studied carefully the comments that he made on this matter on the Gallery News email service yesterday. He has a point, and I shall refer to it in my remarks very shortly. I was quite struck by the percentages to which he drew attention yesterday, so I think that he is certainly on to something. I do not know exactly how we will solve the problem, but I commend him for raising it.
	Jobseeker's allowance for people over 25 has been raised to £64.30 a week, an amount that the Minister for Employment and Welfare Reform admitted yesterday that he would be unable to live on. That is relevant because the claimant count for January increased to 1.23 million, which means that 73,800 more people were claiming the uprated benefit than was the case the month before.
	As the hon. Member for Chorley (Mr. Hoyle) has noted, there has been no increase in statutory redundancy payouts, and the important point that he raised yesterday is that they represent some 56 per cent. of average weekly earnings, as opposed to 203 per cent. when they were first brought in in 1965. That is something that the House should be concerned about. If there has been a specific policy change, I think that we should know about it and debate it. We should see whether we think that it is fair and right, and what we can do about it within the limits of public expenditure. However, if the amount paid has been allowed to wither on the vine without anyone noticing or caring, that is concerning to me.
	This is important, because redundancies are, very sadly, up. In the three months to December, 259,000 people reported that they had become redundant. Sadly, the OECD believes that many more people will claim the benefits uprated in the order, and it has predicted that unemployment will rise faster in the UK than in any other G7 country.
	My party has a range of positive proposals to tackle unemployment, but I do not think, Mr. Deputy Speaker, that you would consider me in order if I decided to outline them now. Instead, I want to turn to the very important matter of pensioner benefits that has been raised already, and quite properly, by a number of hon. Members.
	The Chancellor's pre-Budget statement in November was the basis for a significant part of these orders, but its wording was not as clear as it could have been. It has been criticised by the  Daily Mirror and more recently by the National Pensioners Convention. The Chancellor said:
	"So I will ensure that every pensioner gets a one-off payment of £60 on top of the £10 Christmas bonus, from January. For couples, that figure will be £120, also paid from January."—[ Official Report, 24 November 2008; Vol. 483, c. 503.]
	Dot Gibson, the formidable vice-president of the National Pensioners Convention, is still waiting for her £60 payment. She has said that
	"the Chancellor implied that this payment was in effect a bringing forward of the increase in the state pension due in April, but if it doesn't arrive until the end of March, the whole episode has been a charade. Millions of older people have been misled and must now be left feeling cheated.
	One pensioner rang up to say her brother who lives in France got his £60 on January 1st, but she lives in London and is still waiting...If we had a decent state pension in the first place we wouldn't need to rely on these extra payments."
	I want to look at the issue of means-testing and take-up, which my hon. Friend the Member for Ribble Valley (Mr. Evans) quite properly raised at the start of the debate. There are 3.7 million beneficiaries aged 60 and over in receipt of income-related benefits, and that is 30 per cent. of the population of that group. However, 1.8 million are not claiming the pension credit uprated in the order, which has now been increased to £130 a week. That is of great concern. It may interest the House to know that, in November 2004, the then Secretary of State for Work and Pensions said:
	"The Government still has a take-up problem on pension credit."
	Of the poorest pensioners, where household income is less than 40 per cent. of median earnings, 60 per cent. are not claiming the benefits that they are entitled to—up from 36 per cent. in 1997-98. About 40 per cent. of those entitled to council tax benefit, uprated also in the order, do not claim it.
	We rightly hear a great deal about fuel poverty, particularly regarding pensioners, but pensioners often tell me that they consider themselves to be in council tax poverty, too. I find it quite extraordinary that up to £4.5 billion of means-tested benefits that should rightly go to older people is unclaimed each year. Perhaps that is what the Prime Minister feared when he said:
	"I want the next Labour Government to achieve what in 50 years of the welfare state has never been achieved—the end of the means test for our elderly people".
	We welcome the increase in the state pension, which, as the Minister told us earlier, will be worth £95.25 a week and £152.30 for a couple, and perhaps the Minister will join me in gently pointing out again to the leader of the Liberal Democrats that it is not about £30 a week. Will the Minister also tell us exactly when the Government intend to restore the link with earnings for the state pension? She alluded to the well-worn formula, but many people would like greater precision on that subject. If she said something on that when she replies to the debate, we would all be grateful.
	It is worrying that the take-up of pension credit continues to decline, as an answer that the Department gave on 3 November last year shows. In November 2003, the take-up for female pensioners was 64.9 per cent., and according to the latest figures that I have, which are for February 2008, it has declined—albeit only by a small amount—steadily to 62.1 per cent. So we not only have a problem, as my hon. Friend the Member for Ribble Valley has quite properly identified, but one that is getting worse.
	It is worth putting on the record the number of pensioners not claiming individual benefits, which are uprated by the order. Up to 1.82 million older people are not claiming pension credit—41 per cent. of those entitled. Up to 350,000 older people are not claiming housing benefit—18 per cent. of those entitled. Up to 2.14 million older people are not claiming council tax benefit—a staggering 45 per cent. of those entitled.
	Pensioner poverty has risen by 300,000, both before and after housing costs are taken into account, and is higher than in 1997. In 2006-07, 2.5 million pensioners were living below the poverty threshold of 60 per cent. of median income, representing 23 per cent. of pensioners. After allowing for housing costs, 19 per cent. of pensioners were below 60 per cent. of median income, representing 2.1 million individuals. Those facts were pointed out by Help the Aged as recently as Tuesday of this week. Again, perhaps when the Minister replies, she will tell the House what estimate of pension credit take-up the Chancellor of the Exchequer will use in his Budget report this year.
	The Government received quite a lot of criticism last autumn for their decision to reduce the period of backdating from 12 to three months for pension credit claims. That suggests that they are more interested in saving money than in increasing take-up. So will the Minister confirm that at least 110,000 pensioners will be adversely affected by that change and that they will tend to be older pensioners, who will not be able to claim some of the benefits uprated by the order?
	Falling interest rates may be popular with some people—indeed, with many people, particularly home owners—but they are really bad news for one section of the population. So does the Minister recognise that many pensioners are facing real hardship because their hard-won savings are now attracting very low interest, thus forcing them to rely on many of the benefits uprated by the order? We are talking about people who have done the right thing and what successive Governments told them to do: they saved during their working lives, so that their savings could supplement their incomes in retirement. To add insult to injury, those with modest savings are assumed to earn 10 per cent. on their savings in respect of their eligibility for pension credit, which is uprated by the order.
	Will the Minister update the House on the conversations that the Minister for Employment and Welfare Reform told the House that he would have with her and the Treasury on this matter when he made his statement on 11 December, as reported in column 697 of  Hansard. We would like to know how they got on when they went to the Treasury on that matter. Will the Minister confirm that she is wholly confident that the new personal accounts system will begin on time and that people who are being auto-enrolled into personal accounts will not be worse off by not being eligible for pension credit, which is, again, uprated by the order.
	The Government have presided over the decline in a large number of occupational pension schemes, and we would like to hear the Minister say something about that as well, because of its direct effect on people being forced to claim the benefits in the order.
	Fuel poverty has been mentioned by one or two hon. Members, and the statistics that the Department for Business, Enterprise and Regulatory Reform released recently show that electricity prices have gone up by 17 per cent. in real terms and gas prices by 27.1 per cent. over the past year. Again, that has a bearing on the 5 per cent. figure used to uprate the basic state pension.

Lindsay Hoyle: The hon. Gentleman is being generous with his time in giving way. I agree with him on fuel poverty. I blame the energy companies for their sheer greed in putting up prices and not bringing them down. Does he agree that that is part of the problem and that families, particularly pensioners, are being put into poverty, purely because of the greed of the energy companies?

Andrew Selous: Certainly there is some truth in what the hon. Gentleman says, and I personally think that we need a range of policies to deal with this very important issue and the scandal of the poorest people paying the most through prepayment meters—a matter that I raised in the House a number of years ago. We could do all sorts of things—for example, with the Post Office card account, the use of which the hon. Gentleman will be particularly keen to encourage. People could be provided with decent information, telling them whether they are getting the cheapest tariff. They should not have to ring up and ask; it should be made absolutely obvious to them—something that the Conservative party is proposing. There is something in what the hon. Gentleman says, but we can do a number of other important things to tackle the issue.
	I want to deal with fraud and error—a subject that the Minister for Employment and Welfare Reform mentioned when he made the December statement in relation to the order. It is an important issue, because if we were able to deal more effectively with the £2.6 billion overpaid, we could uprate many of these measures more generously. The figures are pretty staggering: £2.6 billion overpaid, and £1.1 billion of benefit expenditure underpaid. That has been going on for a very long time, and it includes money paid wrongly to prisoners, to people who have moved abroad and who were not entitled to it, to people already earning an income through employment and to people already claiming other benefits.
	The Department is now running a sort of television show, showing some of its inspectors doing very good work. It makes quite entertaining television, but I tell the Minister in all seriousness that £2.6 billion is a very large amount of money at a time of great pressure on public expenditure. Again, I ask her to go back to the Department and discuss the matter with the Secretary of State and her fellow Ministers and to urge that that matter be pushed rather higher up the Department's agenda. We could be more generous with the uprating of a number of these benefits, which, as a number of Members have pointed out already, are not that generous for many of our fellow citizens in great need.
	I want to consider the issue of the complexity of the benefits system. As I have said, 14 pages of benefits are uprated by the order that we are considering. That is 14 sheets of closely typed A4. The National Audit Office report, "Progress in tackling pensioner poverty: Encouraging take-up of entitlements", underlines the fact that complexity is part of the problem when it comes to delivering support to those who need it. It states:
	"Many pensioners and those that advise them"—
	we must not forget the lobby groups and support groups that help pensioners—
	"consider the systems and administrative procedures for claiming benefits to be too complex. In all there are 23 potential entitlements for pensioners, with 36 linkages between 16 of them."
	Our pensioner population will need degrees in higher mathematics to work their way around some of the system.
	Similarly, the 17th report of the Social Security Advisory Committee, published in 2004, says:
	"complexity characterises the entire benefits system...the size, complexity and dispersion of the benefits system, and the blurring of the boundaries over what should constitute its proper role has led to a pervading sense of a loss of cohesion".
	Bodies do not come much more independent than the Social Security Advisory Committee. Help the Aged makes a point in similar terms. It says, on benefits for pensioners, that the
	"system is so muddled and poorly advertised that even Pension Credit, a widely advertised benefit aimed at some of the poorest older people, is only claimed by just over half of those entitled to it."
	I come to the final subject that I want to discuss. It is incredibly important, and I should be grateful if the Minister would respond to this part of my speech as fully as she can when she winds up the debate. If there are points to which she cannot respond, will she write me a fairly full letter on the subject, and put a copy in the Library? I refer to the thorny issue of what is happening in the national insurance fund. I have great concerns about the assumptions that the poor old Government Actuary, Mr. Trevor Llanwarne, has been forced to use, namely the ones given to him by the Chancellor in the pre-Budget report. I have before me a report from the Government Actuary's Department; it is directly relevant to the debate. Indeed, it was produced for the House, and is about the two orders before us. The Government Actuary is forced to use the assumption, made by the Chancellor in the pre-Budget report, that there will be an increase in earnings growth of 3.2 per cent. in 2009-10. The average of the forecasts in the Treasury's January comparison of independent forecasts for the UK economy is an increase in earnings growth of only 2.7 per cent for 2009-10.
	The assumption in the pre-Budget report on claimant count unemployment for 2009-10 was 1.31 million. Yesterday, the figure rose to 1.23 million. The Treasury's January forecast for 2009-10, which uses independent forecasts, is average claimant count unemployment of 1.83 million, so the first thing that I want to say about the national insurance fund is that I am concerned about the assumptions in the pre-Budget report that the Government Actuary has been forced to use. Even small changes in those assumptions are likely to have a very large impact on the fund.
	I want to ask the Minister a question that I should think almost every Member of the House is asked regularly by pensioners in their constituency, not least if those pensioners are allied to the National Pensioners Convention. It is on the thorny subject of the increasing surpluses in the national insurance fund, and the fund's increasing balance. I do not know about the situation in the Minister's constituency, but in mine, the Dunstable pensioners' association and other bodies haul me in once a year and ask, "What are you MPs doing? You are sitting on more and more cash in the fund. We're not very well off. By law, the money can be given only to pensioners and others. Why can't we have some of it?" That is more or less what they are saying.
	I see from the Government Actuary's report that the Government Actuary is required to make sure that there is a yearly excess of at least one sixth over and above what is paid in benefits. This year, that will be a sum of £12.5 billion, yet when we look at the report, we find that the balance is actually £52 billion. The surplus, and therefore the overall balance, has got larger year on year since about 1997, and it is forecast to grow in a substantial way. If Members look at page 30 of the report, they will see that the balance will rise from £52 billion in 2008-09 to £102 billion in 2013-14. That is a substantial rise. That may well be necessary because of demographic trends in the population—there will be a lot more pensioners, and a lot fewer people paying into the national insurance fund—but I have not found that clearly stated by any Minister in recent times.
	It causes me slight concern that when the hon. Member for Newport, West (Paul Flynn) tabled a question asking the Minister's predecessor, the hon. and learned Member for North Warwickshire (Mr. O'Brien), about the issue, part of the answer received was:
	"when there is a surplus it is invested in public services."—[ Official Report, 22 February 2008; Vol. 472, c. 1116W.]
	The Minister knows as well as I do that, by law, the national insurance fund can be used only for pensions, jobseeker's allowance and so on—a very narrowly defined range of public services. People might see the answer and think that money was being taken out of the fund and spent elsewhere in government. The Minister's predecessor went on to say, again in a written answer:
	"The equivalent of the excess of receipts overpayments would need to be raised through tax increases to maintain the Government's fiscal strategy."—[ Official Report, 21 April 2008; Vol. 474, c. 1858W.]
	That is in relation to the issue of ever-increasing yearly surpluses in the fund.
	There may be perfectly good reasons why the balance in the fund is increasing in such a significant way—and such a sustained way, according to the forecasts in the back of the report—but we need clearer answers on the issue, if only so that we can properly engage with people from the National Pensioners Convention and others who are, quite properly, considering the issue and wondering whether the Government could be more generous. I hope that I am not blind-siding the Minister on that issue; I know that it is technical and complicated, but it is incredibly important. I am not playing party politics on this serious issue. If she is not able to give the House a full answer today, will she write me a full letter, and place a copy of it in the Library, so that every Member can see it?
	To conclude, I hope that when we debate next year's uprating order, fewer people will be in dependency, and more people who want support can get it. I also hope that the millions of people who say that they would work if they had the proper support will have had the chance that they want of a better life for themselves and their families, and the chance to be less reliant on benefits. We hope, too, that more of our fellow citizens will be able to make arrangements for their pensionable age, so that some of the all-too-low pensioner incomes will be higher. We will work with the Government on any proposals that they make, but I serve notice on them that the Opposition will make their own proposals to deliver better welfare, and a fairer system that lifts more people out of dependency, which is not where so many of our citizens want to be.

John Barrett: It is interesting that in a week when much of the news has been about people at the other end of the pay scale—those earning large sums of money—we are considering people who are surviving on benefits, and who are very much at the opposite end of the scale. Sadly, important though the measures before us are, they will not get the same news coverage as people who have been getting large bonuses and salaries. That is not to say that the measures are not important; they affect millions of people.
	The hon. Member for South-West Bedfordshire (Andrew Selous) covered many of the issues in great detail in his excellent speech. We welcome the uprating today. We are talking about a significant amount of money that will go to those who are most in need. I am delighted to see pensioners getting a significant rise in their pension. Of the £6.2 billion, £4 billion is going to pensioners. I could say it is too little too late, but we should welcome what has been announced today. It is a good thing.
	We have heard the details of the figures involved. I share with the hon. Member for South-West Bedfordshire a concern about the complexity that runs throughout benefits uprating and the entire benefits system. The 14 pages of details are too much. It is not only difficult for those receiving the benefits to understand; it is also very difficult for those trying to give them advice and work out exactly what benefits people are entitled to.
	As I said in my intervention, I thank the Minister for prior sight of her statement on invalidity allowance. I am pleased that no amounts will be claimed back. It is clear, once again, that because of the complexity of the system, many errors are made. So many people contact hon. Members regularly about errors made by the Department for Work and Pensions, particularly on tax credits. The Minister dealt with one relatively small error, but there are far larger errors out there that need to be tackled. It is also worth remembering today that there are many tapers, allowances and premiums that are not being uprated and have not been uprated for many years.
	We are entering different times. Last year's benefit uprating occurred before the increase in unemployment that we are, sadly, seeing now. With unemployment nudging the 2 million mark and with four unemployed for every vacancy, tackling poverty among the population of working age will assume increasing importance. Even in my constituency, which is not normally noted for much unemployment, Royal Bank of Scotland headquarters announced 2,300 redundancies earlier this week. Many people, for the first time in their lives, will be looking at the results of today's debate. People who have never known unemployment in the past will rely on the upgrading and the benefits that we are discussing.
	With unemployment rising across most sectors, there will be an increasing number of skilled workers on benefits and seeking employment. Although the extra money for jobseeker's allowance is welcome, is the Minister concerned that back-to-work benefits and policies under the Welfare Reform Bill are ill suited to high unemployment? We are considering a number of changes but, in the words of one famous individual, the times are a-changin'.
	I welcome the commitment that incapacity claimants with an age addition will not receive less than £95.15 a week. But does the right hon. Lady understand the frustration of disability groups, in particular, that the rate of support component will be no more than incapacity benefit, despite past promises to the contrary? Does she share my concerns that welfare to work and jobseeker's allowance arrangements have been designed to work in a period of low unemployment, as I said, unlike the circumstances that we will see in the year ahead? We are considering the uprating and various cost of living rises—the Rossi increase was mentioned—but we may be moving into a time of negative inflation.
	In the year ahead, as we enter uncharted waters, the Minister and her Department should consider how we ensure that benefits reach a more realistic level. I am amazed at how many people survive on the basic benefits. In the Treasury Committee, one banker asked what the level of jobseeker's allowance was—what people have to survive on. The figure is about £60 a week. The individual who answered the question was earning about £60,000 a month. Some people out there are surviving on very low levels of benefit.
	I welcome the decision to increase the state pension to £95.25 a week. Will the Minister take on board the point that when benefits are calculated, the income that savers are assumed to receive from their savings is 10 per cent., but that is not happening in practice? People who have been prudent throughout their lives, people who have saved and put money by, do not want to dip into their capital because that will reduce their income and affect the amount of benefits they will have to ask the state for. Many pensioners who have been prudent all their lives do not want to apply for means-tested benefits.
	There is too much means-testing in the system which, along with the complexity, puts many people off applying for benefits. It has been estimated that 1.8 million eligible pensioners do not claim pension credit. When I have raised the issue of means-testing in the past, it has been argued by the Government that that will focus most help on the people who most need it, so that the most deserving are in receipt of the amounts to which they are entitled. Sad to say, those most in need are not those who are entitled to and receive means-tested benefits, but those who are entitled to but do not receive the means-tested benefits, and they are right at the bottom of the heap. Those 1.8 million pensioners who are entitled to money but are not receiving it were often told by the Government that increased amounts such as the Christmas bonus would help make up the difference, but the sum paid out in that form is a small fraction of the £2.8 billion in unclaimed pension credits.
	Fraud and error have been mentioned by previous speakers. It is vital that we ensure that fraud and error are kept to a minimum because both, in effect, take money away from those who are entitled to benefits. The elderly, the disabled, the unemployed, and people trying to get into work and off benefits should get the maximum support to which they are entitled, and if money is being lost through fraud or error, it is not going where it needs to go.
	The Minister mentioned the winter fuel payment. Although I agree that that is usually a Budget issue, will she consider a higher rate for those who claim the higher rate mobility component of disability living allowance? Although benefits help many of those who are disabled, it is extremely expensive to keep the home of someone who is disabled warm, for two reasons—partly because, in certain cases, disabled people do not move around as much as the rest of us, and partly because there is a far higher unemployment level among the disabled so they are more likely to be at home and to need their home heated. The third factor is that the average income of a household with a disabled person in it is lower, so although the costs of running a disabled household are often higher, the income is often lower. The people caught in that pincer movement need extra benefits, and we must make sure that those who are entitled to the benefit receive it.
	It was mentioned earlier that falling interest rates were helping those with mortgages, but many of those who are unemployed and receiving mortgage interest relief are on fixed rate mortgages. I was pleased to see that the Chancellor and the Department have agreed not to introduce the formula which reduces the amount of mortgage relief until May, but if the base rate stays at 1 per cent., the current system whereby people receive their mortgage interest relief is 1.58 per cent. above base rate. That will give people mortgage interest relief at about 2.5 per cent., but 50 per cent. of those paying mortgages have fixed rate mortgages at 5 or 6 per cent.
	I appreciate the action that the Government have taken by not reducing until May the amount that such people are paid, but between now and May a new system will have to be introduced or we will find that the new group of unemployed people who are on fixed rate mortgages will receive a benefit that does not cover their mortgage interest. The end result of that will be that not only will they have lost their job but they will be in danger of losing their house. We hope that many people who are unfortunate enough to lose their job will get back into the job market fairly quickly, but in these times of rising unemployment, that will be more difficult. The last thing that they need is to lose their house at the same time.
	As I have said, I do not want to be niggardly, and I welcome the measures that have been introduced. When the Minister winds up the debate, I would like her to address the issues that we must deal with in the future—higher unemployment, means-testing, which is a major problem with the uprating, low inflation, complexity, which other hon. Members have mentioned, and the high levels of error and of fraud.
	In conclusion, I welcome what has been given, but the Department has far to go.

Oliver Heald: I am glad to have the opportunity to contribute to this important debate.
	The hon. Member for Edinburgh, West (John Barrett) echoed a point that my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) made from the Front Bench about the complexity of the benefits system and of the uprating that we are considering today, which is where I want to start. It is widely recognised that the system of benefits is complex. When the question, "What is a reasonable amount of money for an income replacement benefit?" is asked, there are many different answers. It has been thought for some time—the Work and Pensions Committee has reported on this—that we, as a country, should have a serious look at our benefits system and what a proper level of income replacement benefit should be.
	We should not have a situation in which carer's allowance goes up by one amount and jobseeker's allowance goes up by another, and we should not have a situation in which carer's allowance, which is supposed to be an income replacement benefit for carers, is a totally different amount from JSA, which is also supposed to be an income replacement benefit. Our system is over-complex, and the case for simplification is strong. I hope that the Minister and her colleagues will, in the quietness of their private discussions, examine whether we cannot move to a system that better suits the needs of the new century.
	There are, of course, temptations for Ministers in an over-complex system, and the devil is often in the detail. On the face of it, it is surprising that Ministers come here every year to announce "handsome" increases in benefits, yet at the same time the Institute for Fiscal Studies, which produced a major report on the matter last autumn, tells us that in 10 years' time pensioner poverty will be exactly the same as it is now. It is very surprising that with all those handsome increases, the Joseph Rowntree Foundation told the Work and Pensions Committee that over a 20-year period the effect of fiscal drag and benefit erosion, which lies in the detail of what has been announced, means that the Chancellor will recoup 3.6 per cent. of gross domestic product from the overall bill. That raises questions about the core benefits system, such as whether those benefits are sufficient for the people whom they are supposed to help and what is really going on behind the scenes.
	I suspect that a good deal of sleight of hand goes on, and I will give two examples after I have commented on the point made by my hon. Friend the Member for South-West Bedfordshire about the national insurance fund. Tolley's tax notes record that
	"David Lloyd George stood before Parliament and introduced...the novel concept of National Insurance...as a 'temporary expedient'...It is a curious fact that despite the size and permanence of this levy, very many people know little about it".
	In the fourth edition of their text on the matter, Ogus and Barendt record:
	"People are prepared to subscribe more by way of contributions, which they see as offering returns in the form of personal and family security, than they would be willing to pay by taxation".
	The Government have been diverting money from the national insurance fund into the health budget. The Minister may want to comment on that, but it did not use to happen to the extent to which it does now. That is why the parliamentary answer to which my hon. Friend the Member for South-West Bedfordshire referred pointed out that we must bump up income tax, or a tax, if we do not want a large balance in the national insurance fund—it is jiggery-pokery or sleight of hand.
	The Work and Pensions Committee produced a major report on carers in the autumn. One of our points concerned the size of carer's allowance, which is much smaller than other income replacement benefits. We made the case that the Government should conduct a major review of carer's allowance and that they should treat it as a proper income replacement benefit.
	The Committee also made a more technical point, which the hon. Member for Blackpool, North and Fleetwood (Mrs. Humble) mentioned earlier. Each year, the decision about uprating the amount that people can earn if they are on carer's allowance is made in April, whereas the decision on the national minimum wage is made in October. The effect is that if the national minimum wage goes up by a certain amount, a number of carers are forced off benefit. In the spring, when the uprating takes place, they go back on to benefits, because the benefits have caught up. The Committee felt that that was unhelpful and that the changes should be synchronised, because that would help many carers organise their lives.
	The sad thing is that that would inevitably cost the Government a little bit of money, because those people would no longer be forced off benefit, which is an example of the sleight of hand that occurs. Maintaining that lack of synchronicity saves the taxpayer a little bit of money, but it messes up the lives of carers and is not helpful. Perhaps the Minister will care to admit that that is why the situation has not been changed.
	The Committee highlighted that problem and pointed out that it is making life very difficult for carers. It is therefore surprising that the limit for earnings by those receiving carer's allowance has been frozen, so carers will not catch up this year. Not only is there no synchronicity, which we wanted to help carers, but carers have been done down a little bit by the limit not being increased in line with inflation, which is slightly higher than normal this year. That is another example of sleight of hand.
	My other example concerns the savings credit element of the pension credit. This year—this is being done at a very odd time—the band of income covered by savings credit is being raised. The effect is to narrow the band of income that is eligible for savings credit, which means that pensioners who have got just a little bit more than the basic state pension will get less help than previously. The timing is odd, because the band was supposed to be raised in the context of the Government's introduction of the new system, under which the basic state pension will be uprated by earnings rather than prices. The argument was that if the basic state pension plus the new arrangements for the state second pension were in place, that would already be helping those who had a little more than the basic state pension, so it would be right at that point to start cutting back on the savings credit. However, to raise the band now, when nobody has even set a date for the introduction of the uprating by earnings, is an example of the Government taking advantage. They are trousering a little money now, when really that should be done later.
	It is the same sort of thing as happened last year with the National Insurance Contributions Bill. The Government introduced the upper accrual point for national insurance contributions—again, that was supposed to happen when the basic state pension was uprated by earnings. However, the Government introduced that early as well. They have another year or two, perhaps more, during which people with incomes in the band between the upper accrual point and upper earnings limit are paying national insurance contributions and getting nothing for it. That approach—eroding benefits through the details, with a little sleight of hand—is one of the things that leads to strange results. Generous announcements are made, yet the overall effect, when we consider the detail, is not as good as it seems. So, yes, I support the uprating measures that we are discussing; obviously, benefits should be uprated. However, why do Ministers not have a look at what such little sleights of hand say to the general public and savers?
	There is a consensus in the House that we should tell people that they should save for a rainy day and for their pensions so that they do not end up in the situation of so many in the past who said, "There was no point in saving, because I'd have got just as much on benefits." We are trying to change that culture; we are saying that there should be a much more solid basic state pension and better inducements to save, and that we should gradually remove means-testing from the system. Yet the little lost battles that I have mentioned are working the other way. The system is not all moving in the same direction with a plan designed to encourage hard-working people who want to save.
	One has to ask why the Treasury is like that. There is a solid and long-standing history in the Department for Work and Pensions of wanting to encourage saving and, frankly, to minimise the means-tested benefits bill in the longer term. However, the Treasury looks at everything year by year in a short-term frame. It wants to make little salami slices so that it gets a little back-pocket money from its negotiations with the Department for Work and Pensions. However, overall, that is not in the national interest.
	The burden of my remarks is to ask the Minister whether it is possible for the Government to try to make longer-term decisions to sort out the benefits system. Does the devil always have to be in the system's detail? The result is that the Chancellor saves a little money in the longer term, but we do not get what we really want.

Charles Walker: Normally, this House adopts an austere voice when it debates pensioners. However, I want to start by adopting a celebratory voice to talk about pensioners, because if we had no pensioners, we would have to invent them. In my constituency, and those of my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) and the Minister, pensioners provide a huge public and civic service. There are armies of grandparents dropping off and picking up the children from school and providing babysitting services during the day and in the evenings so that hard-working parents can have a drink at the pub or go out for dinner. Grandparents are hugely important in that role.
	I hope that all our constituencies have flourishing charitable sectors. Which people are the mainstay of charitable organisations? By and large, they are pensioners—people over the ages of 60 or 65 who are fully engaged with their communities. I am thinking of meals on wheels or taking other elderly people to hospital appointments. Again, I say that if we did not have pensioners, we would have to invent them. The same applies to political parties. I am sure that my constituency is like—

Madam Deputy Speaker: Order. I understand why the hon. Gentleman wants to make flattering remarks about the necessity of pensioners in our society; perhaps he would now be kind enough to move on to the order that we are now debating.

Charles Walker: But that is exactly the point, Madam Deputy Speaker. If you will just bear with me for a little longer, I will relate it to what we are discussing.

Madam Deputy Speaker: I have been quite lenient in allowing discussion on the matter. I think that we understand the hon. Gentleman's point and perhaps he could now address his remarks to the order.

Charles Walker: I will, Madam Deputy Speaker.
	It is important that I make two observations about pensioners and their role in our communities, and explain why it is so important that we value that role. We in this place can never, ever do enough for pensioners. If I were Prime Minister, I would very much like to uprate the annual pension by £100 or £200 a week. However, I am not the Prime Minister and I appreciate that that would be impossible to do, whoever I was. I welcome the Government's announcement that they are uprating the state pension, but it is, frankly, not generous: £100 or £150 is the bare minimum. Therefore, we in this place constantly need to ask ourselves what more we can do for the retired. Are we doing enough? Of course, the answer will be that we are never, ever, doing enough, but we need to ask ourselves the question.
	It is important that when we discuss pensions, we consider the many issues facing pensioners today. We understand that although the value of their savings is not deteriorating, the interest on them is going down. A little more than eight months ago we have interest rates of over 5 per cent.; now, we have interest rates of 1 per cent. That is reducing pensioners' income. A few months ago, we had historically high petrol prices; again, that took a disproportionate amount of pensioners' income. As we have discussed, one index of inflation—the retail prices index percentage—puts pensioner inflation at 12.2 per cent., not the accepted percentage that we live by in this place. We have also seen year-on-year above-inflation increases in council tax, which have a disproportionate impact on pensioners and their incomes. A couple of hon. Members alluded to that.
	There is also the cost of utilities. The cost of electricity and gas in the wholesale markets has come down, but that has not yet fed through into the pricing of utilities on the doorsteps of pensioners. I am a relatively wealthy Member of Parliament, and I can afford to wait for utility prices to come down. I do not like waiting—nobody does—but I can afford to do so. For many pensioners, this is becoming very serious. We are having one of the coldest winters for 20 years. I congratulate the Government wholeheartedly on recognising that, but it is very important that they continue to place pressure on the utility companies to get their act together in this respect.
	Pensioners are absolutely at the heart of all our communities, and we owe them a huge debt of thanks and gratitude. Much of what they do goes unpaid and unrecognised, so we in this place have an obligation, year on year, to ensure that we are doing as much as possible for them.

Rosie Winterton: This has been a positive and engaging debate. I join the hon. Member for Broxbourne (Mr. Walker) in his praise of pensioners and the very positive points that he made. Labour Members believe that we have demonstrated that we share that view through several of the measures that we have taken and increasing provision for pensioners, whether in the pensions and benefits system itself, or on wider issues such as investment in the national health service and other public services that are used by our pensioners.
	Many points have been made during the debate. I will try to cover all of them, but if I do not do so, I will ensure that I write to right hon. and hon. Members. A number of contributions, particularly that of the hon. Member for North-East Hertfordshire (Mr. Heald), referred to the slightly complicated benefits system. The Department has a simplification unit that is constantly looking at how we can simplify benefits. I am sure that it would acknowledge that complexity has been placed on complexity, but we try to refine the system as much as we can. It is important, as the hon. Gentleman said, to look at a system that allows for longer-term decisions, and an element of certainty. However, as constituency MPs, we can all own up to the fact that when we press for changes to the benefits system, such changes can sometimes inevitably lead to a greater degree of complexity.

Andrew Selous: On a point of genuine inquiry and interest, is the Minister aware of any country that has cracked this nut? Are the UK Government looking for inspiration from any other country that has gone down this path successfully? I would be interested to hear if she is aware of any.

Rosie Winterton: Other countries often look to our welfare state for inspiration, because it has led the way in providing a crucial safety net for many vulnerable people. We look to other countries to see whether changes have been made that could help to simplify our system. On welfare-to-work benefits, for example, we have considered whether there are simpler systems in other countries.
	I want to deal with a number of points raised, starting with the so-called 10 per cent. rule, which was raised by the hon. Member for Edinburgh, West (John Barrett). I want to emphasise that there is no 10 per cent. rule. The income tariff is a simple method of calculating the contribution that people are expected to make to help to meet their living costs. Some 80 per cent. of pension credit recipients are unaffected by what is called the income tariff. The rules have been in place since 1988, but the Government have tried to make the system more generous than it was. Under the previous system, anyone with savings above £12,000 was not eligible for any support at all. The less generous rules also assumed £1 a week for every £250 of savings. Not only is the rate of tariff income half of the previous rate, but we have abolished the upper capital limit, which gives more people access to more support.
	The hon. Member for North-East Hertfordshire, among others, raised the issue of carer's allowance. As I said, as we work towards reforming the benefits system we will consider how we can best support carers in line with the principles outlined in the carers strategy.
	The hon. Member for Edinburgh, West talked about the fact that inflation was very low and asked what would happen next year. Decisions on uprating for 2020-11 will be made later in the year, but the Government have already made a commitment to increasing the basic state pension by at least 2.5 per cent. Should inflation fall to a negative figure next year, I can assure the House that we would not be looking to reduce current benefit levels.
	A number of hon. Members touched on the question of trying to increase pensioner take-up. I said during my speech that there were a number of areas in which we wanted to see how we could improve take-up, and we will continue to do so.
	On benefit fraud and error, I reassure the House that we have an error strategy and that we are constantly considering ways to ensure that errors are not made. As I said earlier, I have tabled a statement to apologise for the fact that two types of error have been made, but we certainly try to minimise them. The estimated level of overpayment due to fraud and error across all benefits is at 2 per cent., the lowest ever, and we are bringing it down. There has been a great deal of consensus that personal accounts and auto-enrolment are the right way forward, and we certainly want to ensure that they start in 2012.
	I turn to the rate of pensioner inflation, as I believe it is called. It is true that a report by the Institute for Fiscal Studies on the inflation experiences of older households, published in October, suggested that in August 2008 pensioners were experiencing inflation of 7.4 per cent., or about 9 per cent. in the case of the oldest and poorest pensioners. However, it is important to point out that it also stressed that in the long term average inflation is almost identical for pensioners and non-pensioners. It showed also that pension credit is worth about £430 a year more than it would have been if it had been uprated since 2001 according to the inflation index used in the report. Similar figures show that the state pension is currently £340 a year more than if it had been uprated according to the inflation figures given in the report since 1987.

Andrew Selous: The Minister says that pensioner inflation is the same as for the rest of the population in the long term. Does she mean during the time when a person is a pensioner or over their whole life?

Rosie Winterton: I believe that it is during the time when they are a pensioner, but I can return to the hon. Gentleman with further details on the report if that would help.
	On the general point that hon. Members made about savings, I hope that they are aware that the Chancellor has said that he is considering policy options to help pensioners who are currently affected by the interest rate cuts, and that those options may be implemented in the Budget this spring.
	I will write to the hon. Gentleman about the national insurance fund. I am sure that he realises that the combination of recent economic prosperity and demographics means that contributions currently exceed claims. Some of that money has been used to reduce Government borrowing, which ensures that everybody benefits, including pensioners. However, that does not necessarily mean that today's recipients have an unlimited claim on the fund. We need to consider the balance between what is currently happening and what will happen if things become difficult, perhaps because of the downturn or when the demographic balance shifts. We need to ensure that we get that balance right. As hon. Members said, there is a campaign by people who say, "There is £30 billion, it is our money and we should have it straight away." However, there are other important factors for us to take into account when considering the national insurance fund.
	I reiterate a point that I believe I mentioned earlier: we have legislated to re-establish the link between the basic state pension and earnings. As I said, subject to affordability and the fiscal position, our objective is to do that in 2012, and in any event by the end of the Parliament.

Oliver Heald: Savings credit is help for pensioners who have a bit of income on top of their basic state pension. Why is the Minister cutting back on that? The Pensions Policy Institute described the policy as
	"a tighter squeeze on Savings Credit".
	Why is that being done so far ahead of the change to basic state pension earnings?

Rosie Winterton: We have tried to get the balance right between a fair pension system for all and ensuring that the most vulnerable people get the help that they need. As I said earlier, the extra assistance that we have made available to people on pension credit—and the savings element of it—is far more generous than that under previous Administrations.
	We are considering a comprehensive package of help for pensioners. We have a robust foundation on which to redouble our efforts to do more. We can do even more by looking to the longer term, planning for the future and making the right choices to answer the questions posed by demographic change and turning challenge into opportunity.
	The Pensions Act 2007 and the Pensions Act 2008 have laid the foundations for pension reform, backed by positive consensus. The Welfare Reform Bill will ensure that support is matched by responsibility. That is especially important in an economic downturn. The cost of uprating benefits for next year is nearly £6.2 billion and almost two thirds of that will go to pensioners. That is significant investment which recognises that it is right to protect the most vulnerable in society, especially in times of economic hardship.
	On top of our active efforts to increase benefit take-up, the money represents genuine help and action now, when it matters most. That is the right approach, and I am therefore pleased to commend the orders to the House.
	 Question put and agreed to.
	 Resolved,
	That the draft Social Security benefits Up-rating Order 2009, which was laid before this House on 28 January, be approved.

pensions

Resolved,
	That the draft Guaranteed Minimum Pensions Increase Order 2009, which was laid before this House on 28 January, be approved.— (Ms Rosie Winterton.)

LLOYDS TSB AND IRAN (SANCTIONS)

Motion made, and Question proposed, That this House do now adjourn.—( Helen Jones.)

Andrew MacKinlay: On 13 January, I stumbled across a copy of  The Wall Street Journal. An articled headed "Tehran's strip club" reported something that is widely known across the Atlantic in the United States but has not had much oxygen, or light shed on it, in the United Kingdom either in the media or in Parliament. Nevertheless, it relates to our security policy, and our attempts to combat terrorism and have high standards of banking.
	I discovered that Lloyds TSB had pleaded guilty to the Attorney General's Department in the United States to doing things in London to circumvent US sanctions against Iran. Not only  The Wall  Street Journal, but many other journals report that Lloyds TSB has entered into what is described as a deferred prosecution agreement with the US federal authorities, whereby it has already paid $300 million to those authorities by way of a fine. That was done not with a view to settling the matter, but to entering into an agreement with the federal authorities to make full disclosure of what is known in the industry as "stripping" in relation to money that came from Iran via London and got into the United States by the falsifying of documents in London. This is a very serious matter. The US Department of Justice and the district attorney concerned have done a favour not only to the United States but to the wider international financial community and us in the United Kingdom by detecting that operation.
	As I have said, there is no disagreement or debate about the matter. Lloyds TSB has acknowledged fully and unreservedly that it was involved in the practice. However, it made that declaration after being discovered. Lloyds TSB was certainly using the practice, which is illegal in the US, between 2001 and 2004, but never acknowledged that until being challenged after 2007. Indeed, in the period up to 2007, Lloyds TSB used similar practices in relation to moneys that came from Sudan, which were stripped here in London and then got into the US financial and banking system.
	What was the purpose of such a complicated process? I inquired about that. It would seem that Lloyds—and, regrettably, some other financial institutions here in London—helped Iran's rogue banks to infiltrate the US. The Iranians needed American dollars, sometimes to purchase things within the US borders, but also to channel other moneys through US banks to third countries or other parties demanding payment in dollars. All the evidence suggests that at least some of the money was destined to be used to purchase dual-use materials or technology, as part of the Iranians' desire to increase their weaponry and develop weapons, to the disadvantage of the international community.
	The system worked like this. The UK branches or subsidiaries of the Iranian banks would send electronic messages via what is described as the SWIFT banking payment system, which would go to Lloyds. Employees at Lloyds in London would then re-key the data into a new SWIFT message, carefully removing any reference to Iran or its banks. Employees at the British bank called the process "stripping", as I have already said. The US sophisticated screening operations and software would normally have flagged up concerns, but as the transfers came from a respected British financial institution, the alert system did not operate. As I have said, that is agreed ground, and Lloyds TSB has acknowledged it. The Iranians also benefited sometimes from overnight deposits in the US, taking advantage of favourable interest rates.
	The US authorities are now in a race to track down the ultimate destinations of those moneys and their precise origins. The district attorney's office has made it clear that he fears some of the funds
	"may have been used to purchase raw materials for long-range missiles."
	I also regret to tell the House that it is not just Lloyds TSB that is involved. Since starting to delve into the issue, I have discovered that Barclays is having to co-operate with both the US Department of Justice and the district attorney, apparently in relation to similar transactions. Regrettably, the Royal Bank of Scotland has indicated that ABN Amro, which it bought earlier this year with our money, is also being investigated by the US Department of Justice about a similar issue.
	On 21 January, I raised this matter at Prime Minister's questions, and the Prime Minister undertook to look into the matter and to write to me. I asked him how on earth this action could have been taken in London by Lloyds TSB, a British financial institution, to get around US sanctions, and how Lloyds TSB staff could have falsified documents—not my words; that is the admission—to get round those sanctions. Bearing in mind the fact that the United Kingdom has boasted about the need for a strict regime of banking transparency across the membership of the United Nations in order to combat terrorism, how could this have happened in the United Kingdom without there being a breach of UK law? I asked what regulatory bodies such as the Financial Services Authority, the Serious Organised Crime Agency, the Bank of England and the Treasury, and our security and intelligence services, had been doing about it.
	On 29 January, the Prime Minister wrote to me in reply to my questions. He said:
	"The position with regard to the penalty levied against Lloyds TSB is set out in the statement by the US Department of Justice of 9 January 2009. There is nothing further I can add in relation to the agreement reached between the US authorities and Lloyds TSB which is a matter between those two parties. You asked why the Bank has not been prosecuted in the UK regarding this matter. The US action against Lloyds TSB concerns past breaches of US sanctions. We can only prosecute in the UK in relation to breaches of UK law."
	In my view, the Prime Minister has missed the point. After 9/11, the United Kingdom led the call for transparency across the United Nations, and many of us are proud of the diligent work of Sir Jeremy Greenstock, the then United Kingdom ambassador to the UN, who led the sanctions committee. I had assumed, as had other hon. Members, that we had the most rigorous regime of scrutiny and oversight of our banking and financial sector, in order to frustrate illegal transfers across countries in breach of United Nations sanctions. I think that the Prime Minister still thinks that that is the case.
	I had assumed, because of all the posturing from the Dispatch Box by successive Ministers about Iran exporting terrorism, and Defence Secretaries acknowledging that many British soldiers had been killed by ordnance emanating from Iran, that significant sanctions were in place. For a long time, all of us—particularly Her Majesty's Government—have been concerned about Iran's desire to develop missiles and nuclear weapons to a point that we believe will threaten our interests. I find it fantastic that it is not in breach of United Kingdom law for officials at Lloyds TSB in London to falsify documents. Even if I am wrong about the sanctions and that none existed at the time, there must surely be an offence relating to the falsifying of documents.
	I am concerned that there is no indication of any attempt by the regulatory bodies to which I have referred to investigate this matter, or of any serious attempt to find the law in this matter. I felt, from the tone of his letter, that the Prime Minister went on to slap my wrists. He said:
	"Contrary to the assertion that you made in the House, the US case against Lloyds TSB has not involved accusations of money laundering. Therefore there is no suggestion that Lloyds TSB has contravened UK anti-money laundering legislation."
	I was slightly irritated by that, so I thought I would look up the definition of money laundering. I had assumed that it was quite an old term, but I found that it was apparently invented by  The Guardian newspaper at the time of Watergate, so it is a relatively recent one. Money laundering is, I discovered,
	"the practice of engaging in finance/financial transactions in order to conceal the identity, source and/or destination of illegally gained money".
	The Prime Minister's thesis is that at the time of this action, the UK did not have sanctions against Iran in place; apparently we have had them only since early 2007, which will no doubt feature in the Minister's brief. The Prime Minister thus seems to think that this is not a matter for the UK authorities, but I believe that money laundering is.
	Money laundering is something that has had to be combated—both in principle and, I think, in law—for a number of years. We are parties to an organisation known as the Financial Action Task Force on Money Laundering; it is based in Paris and is primarily known by its French name—Groupe d'action financière sur le blanchiment de capitaux. We signed in 1996—it was revised in 2003—and agreed to criminalise money laundering and to enable the authorities to confiscate the proceeds of money laundering. Countries are required to ensure that their banks
	"report certain suspicious financial activities to the appropriate financial regulators and law enforcement authorities."
	There is also something known as the suspicious activities report, to which even Members of Parliament are subject. Lloyds, of course, was hardly going to declare its own wrongdoing, but the UK has an obligation under FATF membership to bear down on such activities. That, however, we have singularly failed to do. Will the Minister kindly address that point in his reply?
	The biggest potential payoff is that Lloyds must now disclose fully to the US authorities all the details of these wire transfers originating in Iran and help the CIA and the FBI to track them to their final destinations. I would like to be assured, however, that, at least from now on, the UK authorities will say they also want full disclosure.
	Before I move on from the Financial Action Task Force, I want to emphasise the fact that it places a duty on banks to know their clients. Lloyds TSB has not used that as a defence in any case, but there is no doubt that the particular FATF agreement to which the UK is party requires us to ensure the highest standards of banking. The UK has clearly failed in that regard and we should be ashamed of that. It is acutely embarrassing to the UK, particularly to the Foreign Office, which, metaphorically speaking, beat around the head those states that were somewhat reluctant after 9/11 to adopt the required transparency.
	I probed and probed to the best of my ability on this matter, Madam Deputy Speaker, and I indicated to you that I felt that things had not been properly reported. I discovered through use of a computer that there had been one or two references to this issue in the UK press and in Parliament, which I shall allude to. In particular, I discovered that a man named Conal Walsh had written in  The Observer on 8 October 2006:
	"The Financial Services Authority is urgently scouring Britain's banking system for evidence of Iranian terrorism funding following an alert from the US authorities. The move comes after officials at the FSA were shown American intelligence indicating that suspicious Iranian funds were being funnelled through the City of London and other financial centres."
	Apart from that report of 2006, however, there is no indication that the agencies to which I referred earlier have really done anything. I think I am entitled to ask the Minister what—if the  Observer article was correct—the FSA found.
	On 26 June last year, the right hon. Member for Richmond, Yorks (Mr. Hague) asked the Chancellor of the Exchequer
	"what steps are planned to be taken through the Financial Action Task Force to ensure that certain Iranian banks cannot abuse the international banking system to support proliferation activities and terrorism."
	In her reply the then Treasury Minister, the hon. Member for Burnley (Kitty Ussher), actually referred to "anti-money laundering", which I thought quite interesting. She said:
	"The Financial Action Task Force... has expressed concern that the Islamic Republic of Iran's lack of a comprehensive regime for anti-money laundering and combating the financing of terrorism... represents a significant vulnerability within the international financial system."—[ Official Report, 26 June 2008; Vol. 478, c. 466W.]
	It was the Minister, not I, who referred to money laundering. Again, however, there was no indication of what was subsequently discovered.
	On 24 November, the right hon. Member for Richmond, Yorks asked the Chancellor
	"what assessment he has made of the implications for UK financial institutions of the decision by the United States administration to ban Iran from undertaking U-turn financial transactions"—
	apparently, that is the technical term for some of the activities to which I referred earlier—
	"involving US financial institutions."
	The new Minister, the hon. Member for Dudley, South (Ian Pearson), replied:
	"The U-turn licence enabled Iranian entities to have indirect access to the US financial system—including through UK financial institutions. Revocation of that licence will mean financial institutions worldwide can no longer route payments for the benefit of Iran through the US."
	He added:
	"We are not aware that UK financial institutions made any significant use of the U-turn licence".—[ Official Report, 24 November 2008; Vol. 483, c. 951W.]
	Someone was, or is, asleep.
	Perhaps the Minister will confirm this later, but I should have thought that both morally and legally, under UK law and because of our international obligations, we had a duty to adhere to the best practices of international banking. Even if at the time of these practices by Lloyds TSB there was no Order in Council or statutory instrument making the activity specifically illegal in the United Kingdom, surely through our lack of intervention we were acquiescing in a serious breach of our international obligations.
	I have referred to the deferred prosecution agreement, which is a legal document. The agreement reached between the Department of the United States Attorney General and Lloyds TSB admits that from 2001 until 2004 Lloyds
	"falsified the business records of banks in Manhattan by engaging in a systematic process of altering wire transfer information"—
	in London—
	" to hide the identity of its clients."
	Lloyds had not owned up to that activity, although it had ceased to engage in it in 2004. It was rumbled only because in 2006 the diligent US authorities had embarked on an investigation of the relationship between the Government of Iran and two New York entities. It was during that investigation that they stumbled across evidence that Lloyds
	"was engaged in the illegal transfer of funds into Manhattan on behalf of sanctioned Iranian banks."
	Regrettably, it seems that they also discovered that other UK financial institutions might be involved in the practice.
	The authorities discovered that Iranian business men were looking for high-quality American electronics. They had to act stealthily. They sought special parts coveted by Iran and especially by those seeking to make roadside bombs to kill United States troops in Iraq. That seems to have been the position. When the US Attorney General was asked whether these moneys were being directed towards terrorism, he said, "Actually that's why we need the full disclosure. We want to know where this came from and where it was going to." If the United States has not, as of this afternoon, fully discovered and had declared to it the totality of this criminal act in the United States, what confidence can I have, as a Member of the House of Commons, that our FSA, our security and intelligence services, the Bank of England and the Treasury have the slightest notion of what has gone on? I have no confidence about that. All the evidence suggests that there has been wilful ignorance and a washing of hands on the part of these agencies.
	These were not random acts, nor were they a mistake; they were not undertaken by rogue individuals. It is indicative that Lloyds TSB knowingly set out to break United States law and condones the action of a large number of its employees acting on its behalf. That could have happened only with the permission of people at the highest level. One internal Lloyds TSB document said that transactions from the London branches of Iranian banks should be processed in "the normal way", which meant removing information that would tie them to Iran—this is all according to the agreement that Lloyds has now entered into with the US authorities.
	Lloyds eventually dedicated specific employees to scrubbing the Iranian transactions—I think there was even an instruction book on how the employees dealt with that. One of the main questions on which the United States authorities are focusing is whether the money went to terrorism. I, too, want to know the answer to that, and I am entitled to know it, given that, apparently, I and others in this House have sent our armed forces into conflict situations where ordnance is coming from Iran.
	In summary, I ask the Minister to address the following points. Will he tell us precisely to what extent this has been examined by the Treasury, the Bank of England, the FSA, SOCA and our security and intelligence services? I guess that he will not tell us about the last of those, and that goes to the heart of the problems with this place—there is no oversight of the security and intelligence services. The ridiculous Intelligence and Security Committee is not a parliamentary Committee; we do not even know, and we not allowed to know, whether it is even trespassing on this issue. That is a further indication of why we need a proper parliamentary Committee. Perhaps we could also create a precedent—perhaps the Minister will indicate whether the Intelligence and Security Committee has looked at this. If it has not, will he invite it to do so?
	I have focused largely on Iran, but some $20 million came from Sudan, through this process, to the US. As has been indicated, this practice went on until 2007—I do not know whether it is a coincidence, but that was when a statutory instrument was passed here. That was probably the cut-off point. It rather indicates that there was full knowledge of and consent about this grave matter by people at a certain level in Lloyds—they were watching all the time. I want the Minister to tell me specifically whether it is lawful for a UK bank to falsify documents in the UK—let us forget about the US on that particular point.
	Obviously, this was a systematic process; people were prepared to do this and it was sanctioned at the highest level in Lloyds TSB. One of the things that we have discovered over the past few weeks is that people do not do things for nowt—clearly, bonuses would have been paid to these people. I would like the Minister to say—if he would not mind—whether or not bonuses were paid to the staff and managers involved.
	Over the past three or four months, the sums of money that have been discussed in this place are beyond belief—not billions, but trillions—so a mere $300 million may appear small change. But to most of us, it is a very serious matter. That is the sum paid to the US authorities by Lloyds TSB as an interim payment. It is no exaggeration to say that that is our money, which is not to say that the US authorities were wrong to demand it. Therefore, we have a right to know what happened. There was criminal wrongdoing, and the response by the UK has been pathetic. I am disappointed with the Prime Minister—not because he wrote the letter, but because he should have told the Treasury that it had to look into what happened. I will not let him get away with washing his hands of this issue; it is a very serious matter. It makes us a laughing stock around the world, it will prejudice the reputation of reputable financial institutions in this country, and I look forward to the Minister's response.

Charles Walker: I congratulate the hon. Member for Thurrock (Andrew Mackinlay) on securing this debate and bringing this important matter to the attention of the House. I intend to make only a brief contribution.
	We live in a morally ambivalent age, and nothing will change that. But what on earth was a British bank doing, doing business with Iran? It was a shameful performance by Lloyds TSB. As the hon. Gentleman rightly points out, the $300 million fine is not coming from a magical printing press. It is shareholders' money and, as taxpayers, we are the shareholders, so it is our money. We need to know exactly what was going on.
	All this happened a few years ago. Since then, we have had a bail-out of the banking sector, in which Lloyds TSB received the full endorsement of Government to take over HBOS, with this appalling act in the US hanging over its head. We can ask Lloyds TSB and its senior board members—they are still in place—how much money is enough. How much money do they need to make? Why did they do business with Iran? After all, we know full well that in Iran homosexual men are routinely murdered and hanged from cranes. Lloyds TSB makes great play of its corporate social responsibility. It claims to value its people. Well, in this matter, its corporate social responsibility does not amount to a hill of beans.
	As the hon. Gentleman so rightly pointed out, we do not know whether the transactions conducted via Lloyds TSB have resulted in the loss of life of young American men and women who are meant to be our allies and whom we are meant to support. Lloyds TSB still has a huge amount of explaining to do on this issue and I hope that the Minister can address those issues when he winds up.
	I do not expect the banking sector to be a paragon of virtue. Indeed, we have seen over the past year that it is very far from that. It is one thing to make bets on derivatives and overseas mortgage markets; it is quite another to do business with the regime in Iran. Lloyds TSB not only did business with that regime, but actively falsified the evidence and covered it up. It cannot claim that an innocent mistake was made, or a rogue manager was responsible and the bank had no idea what was happening. It was sanctioned at the very highest levels of one of the UK's leading plcs. And at that time it was one of our leading plcs—it was probably one of the top large companies quoted on the stock exchange. Again, I agree with the hon. Member for Thurrock that that is of critical importance.
	The hon. Gentleman also highlighted the very important fact that Lloyds did business with Sudan as well as with Iran. Month in and month out, hon. Members and Ministers come to this place to express concern and disgust about what is going on in terms of the persecution of minorities in Sudan, yet one of this country's leading banks was doing business there. I imagine that Lloyds bank thought that it was a sweetener to secure further business. I do not know for sure, but I have a strong suspicion that if the people involved had not been caught they would have continued to grow their business in Iran.
	I accept that there are issues to do with dual jurisdiction, and that we live in a global marketplace where there will always be conflicts and problems such as have been set out today. However, I shall conclude my brief comments by repeating my question of a few moments ago—that is, how much money is enough?
	I always thought that the people who run our major industries, and most politicians, were fundamentally decent people tasked with making hugely important decisions. A lot of people do not like the decisions that our leading business men and politicians take, but they put themselves in such leadership positions, and that means that they have to take difficult decisions and stand by them. The British people are fair minded: we may not like the decisions that are taken, but we recognise the right of the people involved to make those decisions and the reasons why they take them.
	However, I doubt that anyone in this country can fathom how probably decent people thought that it was legitimate to do business in Iran. On the scale of things, and compared to Lloyds' global portfolio, the amounts of money involved are quite small. It did business in Iran because it wanted to earn a little extra. Again, how much money is enough? How much profit did it need to make? Frankly, it is not surprising that our banking sector is in its current mess if such morally ambivalent people are in leadership positions.

Stephen Timms: I am grateful to my hon. Friend the Member for Thurrock (Andrew Mackinlay) for drawing the House's attention to this very important issue. He referred to the letter dated 29 January that he received from the Prime Minister, but let me say a word about the settlement that has been reached. My hon. Friend described it as an interim settlement, and I think that he took that to mean that there could be a further fine.
	My understanding is that that is not the case: the matter has been settled and Lloyds has signed a deferred prosecution agreement, as my hon. Friend the Member for Thurrock rightly said. That means that the matter is settled as long as Lloyds sticks to the agreement for the next two years.

Andrew MacKinlay: Will my right hon. Friend give way?

Stephen Timms: It is rather early in my response, but I will give way.

Andrew MacKinlay: It is early in his response, but the Minister is uttering the spin given to him by Lloyds TSB and the Treasury. He says that the matter has been settled, but it will be final only if there is full disclosure. The settlement is contingent on Lloyds TSB coming up with the fine and full disclosure, but that process has not been concluded yet. The US authorities will draw a line under the matter only when they are satisfied that it has been concluded. I do not feel comfortable that some people involved in criminal activity might get off scot-free, but that has not been agreed yet. The deferred prosecution is precisely that—deferred.

Stephen Timms: Indeed, and as long as Lloyds sticks to the agreement for two years there will no further fine or action. The disclosure process to which my hon. Friend referred is not about to start, and neither did it commence with the agreement on 9 January: as I shall explain in a moment, it happened well before that.
	I want first to explain a little more of the facts of the US case; secondly, to explain how the case fits into UK law and international best practice at that time—I hope to answer some of my hon. Friend's questions—and thirdly, to explain more generally the actions that we have taken to improve the transparency of inter-bank payments and to deal with the financial threats posed by Iran.
	The US Department of Justice's statement of 9 January 2009 set out that Lloyds TSB committed a violation of the US International Emergency Economic Powers Act—legislation under which the US Executive are able to prohibit transactions in response to an "extraordinary threat" arising outside the United States. Of course, the US has had sanctions in place against Iran since 1979, so now for 30 years. They have been progressively tightened since then due to growing concerns about the Iranian regime's sponsorship of terrorism, as my hon. Friend said, and, more recently, its nuclear programme. However, until November last year, US financial sanctions against Iran included a special licensing arrangement, to which my hon. Friend referred, known as the U-turn exception, which allowed some US dollar transactions that involved Iran to be processed through US dollar clearing in New York.
	Those transactions were allowed if, first, they were sent between two non-US banks; and secondly, if the transactions did not require the debiting or crediting of an account of an Iranian individual or entity managed on the books of a US bank. The way that my hon. Friend referred to that slightly gave the impression that a bank had to apply for such a licence. My understanding is that that was a general licence that could be exercised if those two conditions were met. In other words, the exception applied if the Iranian link to the transaction did not touch the US or a US bank directly. It was designed to prevent US sanctions completely shutting off Iranian access to the dollar, given that oil transactions are globally denominated in US dollars. There was quite a wide interest in Iranian oil sales having such access.

Andrew MacKinlay: The Minister might recall that I raised the issue in the context of a reply to the right hon. Member for Richmond, Yorks (Mr. Hague), where the then Minister, our hon. Friend the Member for Dudley, South (Ian Pearson) indicated in his reply that there was not much activity. I raised it in the House to demonstrate that, in my view, there has not been due diligence by our authorities, because demonstrably a lot of activity was going on, but the reply, diligently given by a decent Minister but fed to him by the machine behind, indicated that there was nothing much in this. I do not want to labour the point by going back over my notes, but the  Official Report will show that the tenor of the reply was that there was no problem. Well, there was a problem, and part of my submission to the House is that there has not been due diligence by the other agencies, not even to scratch the surface of this matter.

Stephen Timms: The point that I want to underline is that the general licence allowed banks to conduct such transactions with Iran in those circumstances.
	The US Department of Justice's statement sets out that, between 1995 and 2007, Lloyds TSB, in both the UK and Dubai, made changes, as my hon. Friend has explained, to SWIFT messages—messages on the international worldwide funds transfer network, which are known in the US as wire transfers—worth more than US$350 million that involved principally Iran, but also Sudan, as he has mentioned, and, I understand, Libya as well. That involved removing payment originator information from some inter-bank payment instructions, so that payments would not be identified by US correspondent banks as originating from countries subject to US sanctions. The infringement related to removing originator information, rather than to the transactions themselves. That is quite an important point. The infringement had to do with the removal of that information.
	I understand that Lloyds TSB ceased removing payment originator information from Iranian transactions in 2003. I think that my hon. Friend said 2004; anyway, it was round about then. It is perhaps worth noting that the US banks did process the payments, even though the SWIFT messages did not contain originator information. My hon. Friend suggested that that was because they thought that if the payments were from a UK bank, everything must be fine. My hon. Friend said that ABN AMRO had also been doing such things, too. I was not aware of that; I do not know whether that is correct, but I have no reason to doubt it. It was not a UK bank at the time. There is at least a question that ought to be raised about how the transactions were processed by the US banks, even though the messages did not contain originator information.
	As we have heard, as a result of the breaches of US law, Lloyds has agreed to pay a fine of $350 million. Lloyds has notified the markets of that, and made provisions in its accounts last year for the payment of the penalty. Given its hedging arrangements, the £180 million provision in place in its accounts will, I understand, cover the full size of the penalty. It is important to stress that the US investigation is specific to breaches of US sanctions law; I know that my hon. Friend was concerned about that point. The US investigation does not allege that Lloyds TSB breached international sanctions, or that it facilitated terrorist finance, proliferation finance or money laundering. Indeed, the deferred prosecution agreement between the US authorities and Lloyds records that subsequent screening of the payments routed through the US between August 2002 and the time when the accounts were closed found no matches with names on the US terrorist or weapons of mass destruction watch lists. The US Department of Justice has acknowledged that Lloyds' co-operation with it has provided substantial assistance to the New York District Attorney and the Department of Justice.
	My hon. Friend, perfectly fairly, asks why no one has been prosecuted in the UK over the issue. As he says, he raised the matter with the Prime Minister on the Floor of the House on 21 January. He has anticipated the answer: it is that we can prosecute only for breaches of UK law, and not for breaches of US law. As I have set out, the US case against Lloyds TSB concerns breaches of US sanctions. I certainly have not seen evidence of breaches of UK law in this case. I have seen no evidence of breaches of international sanctions, money laundering rules or terrorist finance rules. That is consistent with the findings in the US case, which is specific to breaches of US sanctions.
	It is worth noting that the US imposed comprehensive financial sanctions on Iran after the Iranian revolution in 1979; we remember some of the circumstances. However, United Nations and European Union sanctions against Iran have been much more recent, and more targeted. Given the history of relations between the US and Iran, it is not a surprise that breaches of US-Iran sanctions did not necessarily amount to breaches of UK or European Union law.
	Given the concerns that my hon. Friend raised about the way in which changes were made to the messages, I shall say a little more about how international banking practice relating to the transparency of inter-bank payments has developed. Decisions on what payment information should be included in SWIFT messages has, in the past, been regarded as a commercial matter for the banks. The decision was dependent mainly on what was required, technically, to allow the SWIFT messaging system to be used successfully. However, new international standards for measures to counter illicit financing were introduced following the 11 September terrorist attacks. The Financial Action Task Force, to which my hon. Friend referred, made nine special recommendations on terrorist financing in 2001, one of which—special recommendation VII—covers wire transfers. It aimed to correct the lack of transparency in inter-bank payments, which was recognised as a potential weakness in the system. Special recommendation VII calls on countries to
	"take measures to require financial institutions, including money remitters, to include accurate and meaningful originator information...on funds transfers and related messages".
	That recommendation was agreed in 2001, and was followed up by technical work on how it should be implemented, which continued until 2005. Once the technical work was complete, the European Union decided to implement special recommendation VII at the Community level. That was done through the Transfer of Funds (Information on the Payer) Regulations 2007, known as the wire transfer regulation, which was taken forward during the UK presidency of the EU in 2005. Following an agreement by the Council of Finance Ministers in, I think, November 2006, the regulation came into effect in January 2007.
	The EU wire transfer regulation requires payments to contain complete information—name, address and account number—on the payer. To remove payment information, as was done in the case that my hon. Friend rightly highlighted, is not permitted under the regulation.
	Until the regulation took effect in January 2007, there was no requirement in UK or EU law for banks to provide full payer information. So the actions of Lloyds TSB involving transactions before January 2007 do not constitute breaches of UK or EU law. And, as I pointed out, Lloyds stopped removing payment information from Iran transactions in 2003, well before 2007 when the legal obligation to do so under UK law and EU law came into effect.
	Actions to tighten the law have been complemented by efforts by the banking organisations to raise standards of best practice. The Wolfsberg group of international banks has set out what it calls messaging practice standards to ensure that the payment system is not abused. Wolfsberg also acted to encourage SWIFT to make technical changes to the messaging system that will increase the amount of data that accompanies certain kinds of payment. Those changes are expected to come into effect at the end of 2009.
	In addition, the Basel committee on banking supervision has been considering the issue at the request of the international regulatory community, and will shortly publish its own statement on the steps that banks should take to increase transparency in international payments.
	Let me conclude by setting out the Government's approach to financial restrictions against Iran. We have been at the forefront of international efforts, in the Financial Action Task Force and the European Union, to strengthen controls on terrorist finance and to improve the transparency of inter-bank payments.

Andrew MacKinlay: I apologise for interrupting. I indicated in my speech that part of the issue was the embarrassment to the United Kingdom and inconsistencies with our foreign policy. I listened carefully to the Minister. It took the United Kingdom and the EU six whole years to implement that financial agreement, yet we were bragging and boasting and beating people about the head around the world from 2001 through the United Nations, in a committee headed by Sir Jeremy Greenstock, to implement it without delay. It is a revelation to us. It shows how we—our Foreign Office and the Treasury—were deficient in due diligence on the matter. It is a disgrace.

Stephen Timms: Let me give my hon. Friend a little more information about the process that was followed. His characterisation of it is not quite right.
	The FATF special recommendation to which I referred was agreed in October 2001, but the specific requirements on banks were not clarified until the Financial Action Task Force agreed an interpretive note in the middle of 2005. My hon. Friend asks why it took so long. That is a fair question. That was the period that the FATF took to achieve and agree that interpretive note. The European Union then acted quite promptly and a proposal was made in July 2005. As I have said, ECOFIN approved the regulation in November 2006, and the regulation took effect on 1 January 2007.
	I shall set out a little bit more information on UK policy. We have been at the forefront of international efforts, including action to deal with the threats posed by Iran's nuclear programme and by its weak anti-money laundering and terrorist finance controls. We continue to work closely with the US and other international partners to utilise a dual-track strategy towards Iran of pressure and engagement. We have taken a leading role in negotiating international financial measures to maintain pressure on the Iranian Government and to protect our financial systems from abuse.
	Key measures that we have taken in the past few years include negotiating an international asset freeze against two Iranian banks—bank Melli and bank Sepah—negotiating FATF statements calling on states to protect their financial systems from money laundering and terrorist finance risks emanating from Iran, negotiating an EC regulation requiring banks to undertake enhanced due diligence on Iranian transactions and adopting new domestic powers in the Counter-Terrorism Act 2008 to allow us to impose financial restrictions in response to external money laundering, terrorist finance or weapons of mass destruction proliferation risks.
	Taken together, those measures and others constitute a robust package of measures to protect our financial sector, which places the UK at the forefront of international action to tackle the threats posed by illicit financing linked to Iran. I hope that that presentation of the history over the past few years has illuminated some of the concerns to which my hon. Friend has drawn the attention of the House. I hope that my hon. Friend welcomes the robust stance that the UK Government have taken and will continue to take on those matters.
	 Question put and agreed to.
	 House adjourned.